When it comes to businesses and ethics, the bankruptcy of the Lehman Brothers Holdings Inc. on September 15, 2008, must be at the top of the list. The Lehman Brothers is a classic example, as they call it, of violations of ethics resulting in failure, bankruptcy. This lucrative firm, which was once one of the largest investment banks in the U.S, used false accounting practices to create a stronger financial position. To the public, it appeared that the Lehman Brothers were very profitable despite the recession at the time.
How did they do it? The answer is Repo 105! By creating a false business and making what really were loans into revenue, the financial statements for Lehman Brother were displaying what seemed to be a healthy business as the fiscal periods rolled and financial statements had to be issued.
As R. Edward Freeman said, “Stakeholder theory says, if you just focus on financiers, you miss what makes capitalism tick.” Clearly, former Lehman Brother CEO, Richard Fuld, did not understand.
Work cited
http://theweekinethics.wordpress.com/2010/03/18/lehman-brothers%E2%80%99-perfect-storm-where-ethical-lapses-met-bad-judgment/
http://www.annarbor.com/business-review/4-ethical-lessons-of-lehman-brothers-collapse-from-bankruptcy-examiner/#.UFF6xaPg-Xk