In this video, McKenna, the audit consultant, and independent journalist focuses on two myths. The first myth refers to the assumption that shareholders damage corporations and the public. McKenna mentions professor Stoute and her book, where she states that there is no legal duty in corporate law for corporations to reduce taxes. In turn, the speaker claims that the key reason for that mistaken belief is the fact that many people perceive shareholders as the owners of businesses, while overall control over corporations is also attributed to shareholders. However, it is interesting that the claims of shareholders regarding any of the issues are often indirect.
To support her argument, the speaker uses a real-life example, where she notes Mr. Timken and the investors, who break up the Timken Steel company that existed for more than 110 years. The author of the article in the New York Times wrote that it was capitalism and the duty of investors to maximize profits that led to such results (Schwartz, 2014). According to McKenna, “it is not just true”. Furthermore, she leaves no explanations and moves the second case, mentioning Morgenson, who also stated that “shareholders own the companies”.
It is quite thought-provoking to watch how the speaker dispels the myths by just saying that they are not true, but she provides little evidence to support her claims. The journalists that are mentioned by McKenna, indeed, use myths in their articles. Also, the speaker argues that journalists often build their writing on the words of university professors, not the legal foundation (Iazzetti, 2021). This leads to the idea that readers should be more aware of the legal framework so evacuate the media sources and make relevant conclusions.
In turn, it is important to understand the point of journalists, who use such false statements. On the one hand, they may lack knowledge in the given field and provide incorrect claims by a mistake. On the other hand, they seem to allegedly use them in terms of achieving higher newsworthiness, meaning that they intentionally distort information to attract the attention of readers. The method of a sandwich looks like a perfect option for masking such news. The journalists first offer a true fact, mention something dubious or false, and complete with true claims. What is interesting, as argued by McKenna, they include uncertain information only in case if it is needed, preferring to avoid it, if possible.
Another myth that is discussed by the speaker is that the audit’s design is not expected to detect fraud. This belief is largely used by external auditors as an excuse when they face litigation. Such cases often happen when their clients report bankruptcy or are accused of fraud. Nevertheless, auditors are fully responsible for fraud. Indeed, it is a widespread expectation gap between what auditors would do as perceived by people and what they are actually responsible for.
To conclude, it should be pointed out that the speaker rationally claims that morality is not a subject of regulation, but behaviors can be and should be legislated. There is a need for policies and laws that would address these two myths. The emphasis should be put on self-regulation and risk evaluation, as McKenna stated. To conclude, this video promotes a greater understanding of how economic myths impact businesses and society.
References
Iazzetti, E. (2021). Baylor Journalism – McKenna [Video]. Web.
Schwartz, N. D. (2014). How Wall Street Bent Steel. The New York Times. Web.