Earnings Management and Fraud
Theranos Exaggerated Company Revenues: https://www.cnbc.com/2018/03/14/theranos-president-exaggerated-revenue-by-1000x-says-sec.html
- Identify three reasons why there may be ethical leadership failures. How can being an effective leader help to detect fraud? What types of ethical leadership failures existed in the case of Theranos?
- What methods were used by Theranos executives to mislead investors? What was unethical about these methods?
- Elizabeth Holmes (CEO of Theranos) was frequently described as being a visionary. What differentiates between visionary and misleading?
- Do you believe the punishments were harsh enough for Balwani and Holmes? What specific measures could the government take to deter executives from committing fraud?
- More companies are using data analytics tools as a key component of risk management. How might data analytics contribute to fraud detection? What are the potential drawbacks to the use of data analytics?