FINOVA and the Loan Write-Off

1. Why do you think the officers and managers waited until the auditors required it to write off the $70 million loan? Given FINOVA's fate and its free-fall in stock price to a final price of $0.12, what issues did the executives miss in analyzing the decision to write down or not write down the loan? Whose interests were served by the decision? 2. Do you think the incentive plans had any effect on the reported eamings? Why or why not? 3. Was FINOVA so generous with its perks for employ- ees that there was a resulting loyalty that was blinding the employees to the real financial con- dition of the company and the financial reporting issues? Would these perks have had an effect on you if you worked for FINOVA? 4. Was FINOVA forthcoming about the level of risk in its business? 1. Why do you think the officers and managers waited until the auditors required it to write off the $70 million loan? Given FINOVA's fate and its free-fall in stock price to a final price of $0.12, what issues did the executives miss in analyzing the decision to write down or not write down the loan? Whose interests were served by the decision? 2. Do you think the incentive plans had any effect on the reported eamings? Why or why not? 3. Was FINOVA so generous with its perks for employ- ees that there was a resulting loyalty that was blinding the employees to the real financial con- dition of the company and the financial reporting issues? Would these perks have had an effect on you if you worked for FINOVA? 4. Was FINOVA forthcoming about the level of risk in its business