RandomGuy
03-06-2006, 01:39 AM
Date: 5 March 2006
Subject: Analysis of Ethical Issues in the Movie “Other People’s Money”
Dr. Morris asked us to watch a movie, define the ethical issues and relate them to accounting. For our movie assignment, I have reviewed and analyzed the movie “Other People’s Money” with Danny Devito and Penelope Ann Miller. In this memo, I will identify and outline the major issues, how these issues relate to accounting, detail what I feel is the most important issue, and relate that to an appropriate lesson for every accounting professional.
Major Issues in “Other People’s Money”
The overriding ethical issue in Other People’s Money is nothing less asking the question as to whether capitalism itself is ethical. This question is put into relief by the conflict between Devito’s character, Larry “the Liquidator” Garfield of Garfield Investments, and Penelope Miller’s character, Kate Sullivan, the daughter and representative of the embattled Chairman of New England Wire and Cable, played by Gregory Peck. The company has fallen on hard times and is targeted by a takeover artist bent on liquidating the company for a profit.
Another ethical issue presented in the movie is the potential for conflicts of interest between the main protagonists, who find themselves attracted to each other during the course of the negotiations and maneuverings. This issue is not addressed implicitly in the movie, ironically perhaps as a nod to making the movie more marketable by using a compelling love story as a vehicle for asking the main question outlined in the previous paragraph.
The final issue of loyalty to the group versus self-interest is portrayed when the CEO meets secretly to betray the Chairman and sells the voting rights to his stock to Garfield.
Relation to Accounting
The primary issue as it relates to accounting is simple. Accounting is simply analyzing data and presenting it in a meaningful way to various stakeholders. In this movie, Larry Garfield uses that data to make some simple calculations to determine that the company is ripe for a takeover. Simply put the information in the stockholder’s annual report lists the values of the assets and that value of the assets when placed for sale exceeds the value of the company’s stock capitalization. As accountants we have a duty to be somewhat impartial when presenting such numbers as they become tools to be used to make important decisions. Accountants in the company could be pressured to “cook” the books to make the company a less attractive target for such takeovers. Such methods would be undervaluing assets to make the stock price seem more in line with the valuation of assets or, in a more likely scenario, inflate earnings reports to drive up the stock price.
The second issue of romantic involvement potentially affecting business negotiations is a universal in the business world. As representatives and sometime advocates of stakeholders we have a duty to avoid compromising our independence “in fact or appearance”.
The last issue of the CEO’s betrayal can be related to a CPA’s duty of confidentiality to clients. The shares he owns are his to vote as he sees fit. As accountants we may be called on to value the voting rights on stock when offered to sale, and we would be called on to be objective in such a case even if the valuation indicates something of a betrayal as in this case. The situation may be somewhat different if the valuation was done by an accountant that worked for the company. Such a company accountant might feel they have a duty to inform their ultimate employer, the stockholders of such a move.
Primary Ethical Issue
The primary ethical issue is one that all countries must wrestle with<<COLON HERE????>>. The tension between the “creative destruction” of jobs and companies under capitalism, and the needs and duties of societies to provide a standard of living to members of those societies. The duty ethics of deontology here fail to resolve this issue. Duty to the shareholders to make as much money as possible would seem to contradict the duty to the employees to keep their jobs. Utilitarianism would come down on Mr. Garfield’s side, as the best thing for society as a whole is that the wasted resources of the company could be better used elsewhere.
The movie’s climactic shareholder meeting distills the issue into two speeches. The first is an impassioned plea for votes on by the current Chairman Jorgenson of New England Wire and Cable, a quintessential “mom and pop” company in which the Chairman is a direct descendant of the founder of the century-old company. He feels something of a duty to his employees as the company is something of a family to all involved. In his speech, he rails against the “self-destruction” of what “Larry the Liquidator” plans to do. A proud man who has worked in an industry his whole life, he sees Mr. Garfield as a “do-nothing” who doesn’t contribute anything to society. “He builds nothing, he makes nothing, he sells… nothing.” In the name of “maximizing shareholder value” he argues that we as a nation are losing sight of the community and sense of commitment to each other that built the USA from a sleepy agrarian society to an industrial powerhouse. His contention that a “business is worth more than the price of its stock” asks us to consider the real underlying worth of any human endeavor beyond mere monetary valuation and is an emotional appeal to preserve a way of life that he sees as rapidly disappearing. He feels that a business is where we should “earn a living, meet friends, and dream our dreams”. The final charge sums up much of the angst of any capitalist society when he accuses Mr. Garfield of “substitute[ing] dollar bills where a conscience should be”.
Mr. Garfield, in his speech, does not deny that he is seeking to make a profit. He opens with an “Amen”, and calls Mr. Jorgenson’s speech a “prayer for the dead”. The business of wire and cable is as bygone as “buggy whips”, and gaining “an increasing share of a decreasing market” is the surest sign of a failure to acknowledge change. This brings forth one of the most important arguments for free-market capitalism. The “creative destruction” of companies and jobs is a natural and good process. Bad and obsolete ideas and companies fail, good and efficient companies prosper. Inefficient and obsolete companies MUST be allowed to die as part of this process. He reminds the stockholders that they “invested in a business”, not an ideology. He contends that t he community and employees have looked out for their interests in the form of taxes on the plant, and pay raises for the employees, why should the owners of the company not look after theirs? The average stockholder doesn’t care if the company “makes cable, fried chicken, or grows tangerines”, as long as that company makes money.
The Bottom Line: What We Should Learn From This Movie
The arguments contrast what is in essence the emotional appeal of socialism (Mr. Jorgenson) and the rational appeal of capitalism (Mr. Garfield).
In the end, the vote is cast, and Garfield wins. This would seem to be the end of the company, but Ms. Miller’s character finds a new use for the company’s product in the form of producing wire mesh for then-new car airbags. The company is saved by the very thing that was threatening its demise, i.e. technological change. A happy “Hollywood” ending, to be sure, but I think it holds an important lesson for any business person. This lesson is summed up by a quote from Alexander Graham Bell: “When one door closes another door opens; but we so often look so long and so regretfully upon the closed door, that we do not see the ones which open for us.” Change is unavoidable, and innovation is the surest way to deal with that change.
I believe that we must always look beyond mere dollars in thinking about business. In this I agree with Mr. Jorgenson. Dollar bills don’t have consciences, people do. We have lifeboats in ships for the same reason we have unemployment insurance and other social safety nets, i.e. it would be unconscionable to let people drown literally or fiscally. That said, businesses must still be allowed to fail. Yes, people will lose jobs in the short run, but I have great confidence in the human capacity to adapt. Allowing people to achieve their own potential, and yes, even sometimes fail, has given modern industrialized countries a standard of living of which kings of just 300 years ago would be jealous.
As accounting professionals we may at some time be called upon to provide alternatives between options that, while they may be cost-efficient, ignore the potential human cost. I would hope that we never lose sight of the fact that businesses really are worth “more than the price of stock”. Sometimes fiscal responsibility MUST be tempered by a duty to society as a whole. Risk taking must still be allowed, but we must be ready to toss out the life preserver for those of us unfortunate enough to fall off the boat.
What makes this movie worthwhile and why it should be used as our group paper is that it looks at the very heart of capitalism and asks where humanity fits into such a system.
An ethics paper I wrote.
A, B, C, D, or F? and why?
Subject: Analysis of Ethical Issues in the Movie “Other People’s Money”
Dr. Morris asked us to watch a movie, define the ethical issues and relate them to accounting. For our movie assignment, I have reviewed and analyzed the movie “Other People’s Money” with Danny Devito and Penelope Ann Miller. In this memo, I will identify and outline the major issues, how these issues relate to accounting, detail what I feel is the most important issue, and relate that to an appropriate lesson for every accounting professional.
Major Issues in “Other People’s Money”
The overriding ethical issue in Other People’s Money is nothing less asking the question as to whether capitalism itself is ethical. This question is put into relief by the conflict between Devito’s character, Larry “the Liquidator” Garfield of Garfield Investments, and Penelope Miller’s character, Kate Sullivan, the daughter and representative of the embattled Chairman of New England Wire and Cable, played by Gregory Peck. The company has fallen on hard times and is targeted by a takeover artist bent on liquidating the company for a profit.
Another ethical issue presented in the movie is the potential for conflicts of interest between the main protagonists, who find themselves attracted to each other during the course of the negotiations and maneuverings. This issue is not addressed implicitly in the movie, ironically perhaps as a nod to making the movie more marketable by using a compelling love story as a vehicle for asking the main question outlined in the previous paragraph.
The final issue of loyalty to the group versus self-interest is portrayed when the CEO meets secretly to betray the Chairman and sells the voting rights to his stock to Garfield.
Relation to Accounting
The primary issue as it relates to accounting is simple. Accounting is simply analyzing data and presenting it in a meaningful way to various stakeholders. In this movie, Larry Garfield uses that data to make some simple calculations to determine that the company is ripe for a takeover. Simply put the information in the stockholder’s annual report lists the values of the assets and that value of the assets when placed for sale exceeds the value of the company’s stock capitalization. As accountants we have a duty to be somewhat impartial when presenting such numbers as they become tools to be used to make important decisions. Accountants in the company could be pressured to “cook” the books to make the company a less attractive target for such takeovers. Such methods would be undervaluing assets to make the stock price seem more in line with the valuation of assets or, in a more likely scenario, inflate earnings reports to drive up the stock price.
The second issue of romantic involvement potentially affecting business negotiations is a universal in the business world. As representatives and sometime advocates of stakeholders we have a duty to avoid compromising our independence “in fact or appearance”.
The last issue of the CEO’s betrayal can be related to a CPA’s duty of confidentiality to clients. The shares he owns are his to vote as he sees fit. As accountants we may be called on to value the voting rights on stock when offered to sale, and we would be called on to be objective in such a case even if the valuation indicates something of a betrayal as in this case. The situation may be somewhat different if the valuation was done by an accountant that worked for the company. Such a company accountant might feel they have a duty to inform their ultimate employer, the stockholders of such a move.
Primary Ethical Issue
The primary ethical issue is one that all countries must wrestle with<<COLON HERE????>>. The tension between the “creative destruction” of jobs and companies under capitalism, and the needs and duties of societies to provide a standard of living to members of those societies. The duty ethics of deontology here fail to resolve this issue. Duty to the shareholders to make as much money as possible would seem to contradict the duty to the employees to keep their jobs. Utilitarianism would come down on Mr. Garfield’s side, as the best thing for society as a whole is that the wasted resources of the company could be better used elsewhere.
The movie’s climactic shareholder meeting distills the issue into two speeches. The first is an impassioned plea for votes on by the current Chairman Jorgenson of New England Wire and Cable, a quintessential “mom and pop” company in which the Chairman is a direct descendant of the founder of the century-old company. He feels something of a duty to his employees as the company is something of a family to all involved. In his speech, he rails against the “self-destruction” of what “Larry the Liquidator” plans to do. A proud man who has worked in an industry his whole life, he sees Mr. Garfield as a “do-nothing” who doesn’t contribute anything to society. “He builds nothing, he makes nothing, he sells… nothing.” In the name of “maximizing shareholder value” he argues that we as a nation are losing sight of the community and sense of commitment to each other that built the USA from a sleepy agrarian society to an industrial powerhouse. His contention that a “business is worth more than the price of its stock” asks us to consider the real underlying worth of any human endeavor beyond mere monetary valuation and is an emotional appeal to preserve a way of life that he sees as rapidly disappearing. He feels that a business is where we should “earn a living, meet friends, and dream our dreams”. The final charge sums up much of the angst of any capitalist society when he accuses Mr. Garfield of “substitute[ing] dollar bills where a conscience should be”.
Mr. Garfield, in his speech, does not deny that he is seeking to make a profit. He opens with an “Amen”, and calls Mr. Jorgenson’s speech a “prayer for the dead”. The business of wire and cable is as bygone as “buggy whips”, and gaining “an increasing share of a decreasing market” is the surest sign of a failure to acknowledge change. This brings forth one of the most important arguments for free-market capitalism. The “creative destruction” of companies and jobs is a natural and good process. Bad and obsolete ideas and companies fail, good and efficient companies prosper. Inefficient and obsolete companies MUST be allowed to die as part of this process. He reminds the stockholders that they “invested in a business”, not an ideology. He contends that t he community and employees have looked out for their interests in the form of taxes on the plant, and pay raises for the employees, why should the owners of the company not look after theirs? The average stockholder doesn’t care if the company “makes cable, fried chicken, or grows tangerines”, as long as that company makes money.
The Bottom Line: What We Should Learn From This Movie
The arguments contrast what is in essence the emotional appeal of socialism (Mr. Jorgenson) and the rational appeal of capitalism (Mr. Garfield).
In the end, the vote is cast, and Garfield wins. This would seem to be the end of the company, but Ms. Miller’s character finds a new use for the company’s product in the form of producing wire mesh for then-new car airbags. The company is saved by the very thing that was threatening its demise, i.e. technological change. A happy “Hollywood” ending, to be sure, but I think it holds an important lesson for any business person. This lesson is summed up by a quote from Alexander Graham Bell: “When one door closes another door opens; but we so often look so long and so regretfully upon the closed door, that we do not see the ones which open for us.” Change is unavoidable, and innovation is the surest way to deal with that change.
I believe that we must always look beyond mere dollars in thinking about business. In this I agree with Mr. Jorgenson. Dollar bills don’t have consciences, people do. We have lifeboats in ships for the same reason we have unemployment insurance and other social safety nets, i.e. it would be unconscionable to let people drown literally or fiscally. That said, businesses must still be allowed to fail. Yes, people will lose jobs in the short run, but I have great confidence in the human capacity to adapt. Allowing people to achieve their own potential, and yes, even sometimes fail, has given modern industrialized countries a standard of living of which kings of just 300 years ago would be jealous.
As accounting professionals we may at some time be called upon to provide alternatives between options that, while they may be cost-efficient, ignore the potential human cost. I would hope that we never lose sight of the fact that businesses really are worth “more than the price of stock”. Sometimes fiscal responsibility MUST be tempered by a duty to society as a whole. Risk taking must still be allowed, but we must be ready to toss out the life preserver for those of us unfortunate enough to fall off the boat.
What makes this movie worthwhile and why it should be used as our group paper is that it looks at the very heart of capitalism and asks where humanity fits into such a system.
An ethics paper I wrote.
A, B, C, D, or F? and why?