Reporting negative performance : when is silence gold?

Connie SHUM, Gladie LUI, Alec CHUNG

Research output: Journal PublicationsJournal Article (refereed)peer-review


This case illustrates a real-life situation concerning an ethical dilemma that a management accountant faces when analyzing deteriorating financial statements. The management accountant has to balance the interests of the employer company, the investment bank, and the investors while facing undue pressure from senior management, regulator, and the media. By reading the story of Tim Chan, who was asked to prepare an operating and financial analysis of a company for listing on the stock exchange, the reader will observe how a management accountant assured senior management of a strong financial position and outlook but later acted expediently and disclosed selective negative information to satisfy the regulator. However, Tim’s action stirred up resentment and intimidation by senior management, thereby forcing him to reluctantly hide more gloomy information. Worse still, that information subsequently surfaced, and Tim suggested another temporary expedient act to alleviate any possible adverse effect on the company’s stock performance.
Original languageEnglish
Pages (from-to)176-185
Number of pages11
JournalJournal of Financial Education
Issue number1-2
Publication statusPublished - 2016


  • deteriorating performance
  • Sensitivity analysis
  • listing
  • financial statement analysis
  • profit warning
  • Initial public offering
  • ethics


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