CEO Hubris, Fraud & How to Prevent It

Posted by TonyJohnston_CNi under Management
From http://blog.tonyjohnston.biz 5351 days ago
Made Hot by: ritchelalms on September 1, 2009 12:12 am

According to a new study by researchers from three Canadian universities, the biggest red flag for a potential accounting fraud is a CEO with a truly oversized ego. Here is a recipe for how to better prevent it.

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Comments

Written by lyceum
5347 days ago

Anita,

I use the word in the philosophical way. I have picked the word EGO for my blog for a reason. It is time to stand up for the individual and his or her right to engage in an exchange with other individuals. Words have meaning and it is important to understand how you come up with a concept.

Tony Johnston: I propose that we protect ourselves against these types by writing down the rules and act accordingly to these. Disputes and fraudulent behavior should be taken care by an objective court system.

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Written by TonyJohnston_CNi
5347 days ago

Is not what you say (that fraud causing CEOs have a "lack of a true self and responsibility to the Board, Shareholders," etc) just the flip side of their having having excessive focus on their own selves (i.e. their being ego driven or all about their own "I" as you put it)? Anyway, what do you propose we all do to protect ourselves from those types? That is the key question here I think.

Tony Johnston

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Written by lyceum
5348 days ago

Tony Johnston,

I don't agree with the Canadian study that the ego is the biggest problem for potential accounting fraud. It is the lack of a true self and responsibility to the board, shareholders, coworkers, employees and parties in the whole supply chain, that is the root of the problem. The CEO should learn about leadership from some great authorities on the subject, e.g. Edwin A. Locke.

The word ego is I (am) in Latin. Without individual responsibility, you will not have a company at all.

"According to a new study by researchers from three Canadian universities, the biggest red flag for a potential accounting fraud is a CEO with a truly oversized ego."

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Written by smallbiztrends
5347 days ago

Martin, I wonder if there isn't a difference in the translation of the word "ego"? It strikes me that you use the word one way, but the study is using "ego" in a different and negative way. ???

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Written by ShawnHessinger
5350 days ago

Tony,

Management theory, at least the version preached by the kinds of people you're talking about, has always insisted on a chain of command system that it seems to me encourages this kind of thing. I'm only a small entrepreneur, but one of my greatest fears is that after building a substantial business I would accidentally hire one of these people and never find out what's going on in the levels below. It must look good from the top when the company seems profitable and you've had all the worries taken off your shoulders. But my firm belief is that a lack of checks and balances always invites trouble.

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Written by TonyJohnston_CNi
5347 days ago

Shawn, I think yours is a healthy, prudent fear, much like the butterflies of anxiety actors get before going on stage. These are the motivators that help make us do well. In companies, making every effort to hire 'good/ethical' people is important, and so is not giving them too much temptation to stray. That is what check and balances are for and that is why auditors insist on proper separation of duties. Doing that helps to prevent anyone from having too much power. In the same way, I don't think CEOs should be allowed excessive power, which is why I made the proposal I did. I'm glad you found value in it and good luck to you in your business.

Tony Johnston

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