American Airlines (AMR Corporation) - Research Paper Example

This is because the business of stock trade holds no assurances and one has the potential to either enjoy large amounts of profit from their trades or suffer huge amounts of loss as well if things do go as expected (DePamphilis, 2009). The public companies whose shares are involved in this trade are able to profit as well in terms of stock value, which has the potential to raise the value of their company in general. This is to say that, the higher the price of their stock, the higher the value of the company.

Due to this relation, senior management in such companies tends to focus on stock prices and ways that they can be increased on the market in the short term so as to raise the value of the company. This can read to unethical behavior as a result as the management may be tempted to trick individuals into thinking that their stock is worth more than it is in actuality (Sandage, 2006). The increase in the value of stock leads to an increase in demand for the stock which in turn raises the value of the stock even higher and it is this co relation that may tempt senior management to tamper with realistic value of their stock so as to cause a rise in demand which will in effect actually raise the value of the stock as a result. . By postponing this responsibility, the company was able to keep hold of the funds that would have been used for this activity and include it in the earnings reports that they put out.

Thus, it would look like the company is doing better than it actually is as those studying the results would not be aware that the funds displayed were partly increased by the postponement of an expense which would have to be dealt with eventually. 2 Deferring the aircraft maintenance was harmful and unethical to both the shareholders of the company6 as well as the customers who used their services. This is because the company dealt in a very sensitive area of transport (air transport) where the good condition of the crafts used was essential in their everyday business.

It was unethical to the shareholders as they were made to believe that the stock they owned was doing better than they thought through the manipulation of funds (DePamphilis, 2009). It also put them at risk of suffering losses should any accident have occurred as a result of shunning this maintenance responsibility as the stock value would have dropped drastically as a result. Their actions were even more dangerous to customers who used their services as they put their lives at risk through failing to perform scheduled maintenance on their aircrafts, which could have led to an accident that may have resulted in the loss of lives.

This is a more serious offence than tricking those trading in shares into thinking that the company they have invested in is doing well and involved potentially more devastating results than the simple manipulation of earnings through other means. 3 In 2011, American Airlines decided to file for a Chapter 11 bankruptcy that the management saw was