The issue of management discretion Essay Example | Topics and Well Written Essays - 500 words

The issue of management discretion - Essay Example The challenge compromises the quality of the financial reports delivered by the company analysts. This aspect is favorable to one party becomes a barrier for another party to the achievement of a certain goal. For instance, the case of Adelphia Company reveals management discretion challenge for the company stakeholders. In this case, the communications company created a high amount of debt amounting to $2.6B in its off-balance sheet records (Siddiqui 37). The company provides cable entertainment and other communication services. The debt was created when the top management of the company shifted the loans of the company amounting to $2.6B to the unconsolidated books of account, which were controlled by the family of the founders of the company, Adelphia Company. Accordingly, the money borrowed by the company to fund the company’s projects, balanced personal loans of the Adelphia founder family members. The rest of the amount was used in the covering of other expense relating to the Adelphia founder family members. Additionally, the money was spent in the purchase of a golf course and purchase of Adelphia stock, which was unwarranted, by the company rules and regulations. According to Martin, the money was misused in the purchase of luxurious condominiums in the city of Colorado and New York City (67). No expenditures were related to the initial objectives of seeking the company loan. The whole syndicate wax in the benefit of the executive team while it was in complete violation of the company regulation and the shareholders’ interests in the Adelphia Company. The move evoked the stakeholders’ stern reaction. The afflicted parties sued the executive management of mismanaging an embezzling of the Adelphia Company’s financial resources. The retaliation measure of filing of a bankruptcy claim was appropriate given that the claim represented the true state of affairs of the Adelphia