1.
On a systemic level, consider whether the practice of issuing earnings forecasts is good, bad, or indifferent.
Is the practice of issuing earnings forecasts a socially beneficial one?
Should the practice be encouraged, required, discouraged, or prohibited?
Does the practice encourage deception or manipulation?
2.
consider whether the corporate decision to issue an earnings forecast is ethically appropriate when the company has some
reason to suspect the forecast is misleading and investors may make decisions using the misleading forecast.
Should a corporate decision be based on the kind of information Lungren picked up in his private life.
Is Unicomp’s forecast really misleading, or would investors be aware of the imminent shortage of parts from other
sources anyway? Does the investors’ “right to the truth” mean that a company must exercise great or moderate care to
ensure that its forecasts are accurate?
If it were you, would you
· Issue no forecast,
· Issue Lungren’s prepared forecast, or
· Issue a different kind of forecast.
[Be honest as you are not graded on your ethical values, but more so on your ability to incorporate ethical considerations in your decisions]
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3.
In considering the ethically appropriate course of action for John to take, consider the following questions:
· What are the personal/corporate pressures and constraints under which John is acting? Possible
responses:
– Financial pressures for his family.
– The probability that even if he refuses, the company will still issue the prepared forecast.
– The probability that the investment community will discount the forecast anyway.
– The probability that the “rumor” of impending shortages will shortly become public anyway.
Based on these constraints, is John justified in issuing the prepared forecast even if he believes it is not accurate?
