If you are a privately held firm, depending on the ownership structure, only a handful of people need to know if there are any serious problems. Since everyone is sworn to secrcy, and it is generally in their best interest to be quiet, no one would ever know what happened.
For a public company, it is different. Not only the shareholders but a whole range of institutions need to know if there are any problems, particularly with company financials. As a business leader (at whatever level) when should you go public. Many companies (Enron, Worldcom, etc.) got into trouble for not admitting the problems right away and working to fix them. In fact the leadership team engaged in coverups.
Should the leadership be honest with the investor community? Should the press releases and investor presentations state the truth as they know it versus massaging the numbers to make them look better (without necessarily cooking the books).
There are not many CEOs that I have seen who will stand up and openly talk about the problems and challenges facing their organizations. They will go through a lot of mumbo-jumbo without honestly sharing what is ailing the organization and what are they doing to fix it.
Ed Zander, CEO of Motorola, is an exception. I heard him speak in April and when he put up a chart on valuations, he was not shy to point out that Motorola P/E ratio was the lowest in its peer group. Kudos to him for having the guts to openly admit what ails Motorola and how he will fix the problems.
For a public company, it is different. Not only the shareholders but a whole range of institutions need to know if there are any problems, particularly with company financials. As a business leader (at whatever level) when should you go public. Many companies (Enron, Worldcom, etc.) got into trouble for not admitting the problems right away and working to fix them. In fact the leadership team engaged in coverups.
Should the leadership be honest with the investor community? Should the press releases and investor presentations state the truth as they know it versus massaging the numbers to make them look better (without necessarily cooking the books).
There are not many CEOs that I have seen who will stand up and openly talk about the problems and challenges facing their organizations. They will go through a lot of mumbo-jumbo without honestly sharing what is ailing the organization and what are they doing to fix it.
Ed Zander, CEO of Motorola, is an exception. I heard him speak in April and when he put up a chart on valuations, he was not shy to point out that Motorola P/E ratio was the lowest in its peer group. Kudos to him for having the guts to openly admit what ails Motorola and how he will fix the problems.