read the focus: what are the potential risks to a company of unethical behaviors by employees and what are the potential risks to the public and to stakeholders!?

Baby You Can D In 1934, Hitler challenge industry to come up with an in People's Car." Ferdinand P US ON ETHICS in practice You Can Drive My Car-Just Not a VW Diesel Volkswagen had come a long way. Volkswagen paid a big price imme. the capital budget roughly 8%--the 24 Hitler challenged German diately. Within days, the EPA ordered first reduction since global auto sales to come up with an inexpen- ww to recall nearly 500.000 diesel cars crashed during the Great Recession hicle for ordinary families and the company suspended US sales in March 2017. Volkswagen pled lo's Car." Ferdinand Porsche's of all 2015 and 2016 models alleged to quilty in U.S. court to conspiracy and on at the nod, and construction have defeat devices. Within a week obstruction of justice. The record fine can on a factory to produce WW stock plummeted 33%, the yield on pushed the cost of the emissions Gotles in modern-day Wolfsburg, its outstanding five-vear debt doubled scandal in the U.S. alone to roughly may still the corporate head and Winterkom resigned. Within a 1.3 times the entire company's net arters. By 2015, VW was the world's month, Standard & Poor's downaraded income for 2014. For its ethical trans- rond largest automaker, producing the company's short and long-term gressions. WW saw not only current 40 2 million cars annually. Not content debt from A to A- and indicated further earnings but also growth opportuni- ith second, CEO Martin Winterkorn downgrades were possible ties squashed like a bug. announced plans to pass Toyota and By November, it was clear the lead the industry "economically and scandal wasn't going away. On top of The U.S. boasts the world's largest ecologically" by 2018. the cost of recalls, Volkswagen faced auto market but also the toughest Then, on September 18, 2015, staggering government fines and civil emissions standards. Volkswagen Volkswagen's fortunes changed. The settlements. Even worse, the scandal believed boosting U.S. sales with U.S. Environmental Protection Agency was damaging the brand-sales of "clean diesel" cars was key to over- (EPA) charged the company with delib- WW-group cars worldwide fell 5.3% in taking Toyota. What role did WW's erately programming diesel engines October 2015. The capital budget desire to be top automaker play in on eight passenger models to fool took the first hit. Net present value was the emissions scandal? emissions tests. Allegedly, "defeat under assault from two directionsa Ferdinand Pich, grandson of Fer- devices" enabled the cars to meet higher cost of capital and lower dinand Porsche, served as Volkswa- government standards during testing, expected cash flows. With lower credit gen's CEO from 1993 to 2002 and despite spewing up to 40 times per ratings, WW would now pay more for board chairman until 2015. He also missible levels of nitrogen-oxide pol debt financing. Declining sales meant selected the next two CEOs (includ- lutants in ordinary driving. WW later lower expected cash flows from R&D ing Winterkom). What role did insider conceded that roughly 11 million cars and new factories. Accordingly, WW succession play in the scandal? worldwide contained such devices. forgot about burying Toyota and cut Environmental pe ronmental Protection Agency. EPA. California Notify Volkswagen of Clean Air Act Violations/Carmaker Allegedly Used Software that Circumvents ons Testing for Certain Air Pollutants. Press Release, September 18, 2015. Ewing, Jack and Jad Mouawad. Vw Cuts Its R&D Budget in Face of stly Emissions Scandal," New York Times, November 20, 2015. The Focus on Ethics box recounts how an ethical lapse at Volkswagen dra- matically reduced the NPVs (and IRRs) of its investment opportunities, at least for a few years