As they saying goes, our true ethical standards are clear by our behaviors when no one is looking. There is an interesting way this principle comes out in business. When a company is attempting to go public (have its IPO or initial public offering), there is always a great deal of clean-up to do. Suddenly company accounting inches closer toward GAAP. Governance improves, or, in some cases, begins. In short, the companies and their underwriters know that going public takes some clean-up on loosey-goosey accounting, operations, and even business models. Having operated under the radar for years (or at least out of the glaring daylight in which publicly traded companies companies), what they should have been doing was suppressed by what they could do. With no one looking, why bother? Someone is about to turn the lights on in the kitchen, and no one wants to find roaches.
For example, We (nee WeWork) had some interesting accounting and even more interesting governance issue. Conflicts abounded and as was profligate spending. In fact, the company was so far gone on those issues that its CEO departed, and, well, between the discoveries and the dampening effect of COVID on the need for office space, the IPO was a goner.
Airbnb is about to go public. Airbnb has what is known as its “Party House” problems. Too many Airbnb properties offer short-term leases for bachelor, weekend, and fraternity parties. It is not just the noise, the weed, and the late-night hours. There have been shootings, fatalities, and significant damage to the rental properties and homes nearby. Regulatory movements by neighbors who have had to pull too many all-nighters due to the noise are taking hold. Airbnb made money as homeowners in the area watched their quality of life and property values decline. No one was looking, and Airbnb became an $18-billion company.
Now facing the risk concerns of potential investors on these party-house problems, Airbnb is busy banishing party promoters from its site, considering suits against the renters for damages, and scanning social media to prevent the large gathering one-night rentals. Not until the IPO did anyone care. Ethics do pick up when someone is watching.
About mmjdiary
Professor Marianne Jennings is an emeritus professor of legal and ethical studies from the W.P. Carey School of Business at Arizona State University, retiring in 2011 after 35 years of teaching undergraduate and graduate courses in ethics and the legal environment of business. During her tenure at ASU, she served as director of the Joan and David Lincoln Center for Applied Ethics from 1995-1999. In 2006, she was appointed faculty director for the W.P. Carey Executive MBA Program. She has done consulting work for businesses and professional groups including AICPA, Boeing, Dial Corporation, Edward Jones, Mattel, Motorola, CFA Institute, Southern California Edison, the Institute of Internal Auditors, AIMR, DuPont, AES, Blue Cross Blue Shield, Motorola, Hy-Vee Foods, IBM, Bell Helicopter, Amgen, Raytheon, and VIAD.
The sixth edition of her textbook, Case Studies in Business Ethics, was published in February 2011. The ninth edition of her textbook, Business: lts Legal, Ethical and Global Environment was published in January 2011. The 23rd edition of her book, Business Law: Principles and Cases, will be published in January 2013. The tenth edition of her book, Real Estate Law, will also be published in January 2013. Her book, A Business Tale: A Story of Ethics, Choices, Success, and a Very Large Rabbit, a fable about business ethics, was chosen by Library Journal in 2004 as its business book of the year. A Business Tale was also a finalist for two other literary awards for 2004. In 2000 her book on corporate governance was published by the New York Times MBA Pocket Series. Her book on long-term success, Building a Business Through Good Times and Bad: Lessons from Fifteen Companies, Each With a Century of Dividends, was published in October 2002 and has been used by Booz, Allen, Hamilton for its work on business longevity. Her latest book, The Seven Signs of Ethical Collapse was published by St. Martin’s Press in July 2006 and has been a finalist for two book awards.
Her weekly columns are syndicated around the country, and her work has appeared in the Wall Street Journal, the Chicago Tribune, the New York Times, Washington Post, and the Reader's Digest. A collection of her essays, Nobody Fixes Real Carrot Sticks Anymore, first published in 1994 is still being published. She has been a commentator on business issues on All Things Considered for National Public Radio.
She has served on four boards of directors, including Arizona Public Service (1987-2000), Zealous Capital Corporation, and the Center for Children with Chronic Illness and Disability at the University of Minnesota. She was appointed to the board of advisors for the Institute of Nuclear Power Operators in 2004 and served on the board of trustees for Think Arizona, a public policy think tank. She has appeared on CNBC, CBS This Morning, the Today Show, and CBS Evening News.
In 2010 she was named one of the Top 100 Thought Leaders in Business Ethics by Trust Across America. Her books have been translated into four different languages. She received the British Emerald award for authoring one of their top 50 articles in management publications, chosen from over 15,000 articles.
Personal: Married since 1976 to Terry H. Jennings, Maricopa County Attorney’s Office Deputy County Attorney; five children: Sarah, Sam, and John, and the late Claire and Hannah Jennings.
