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Element 18. Honesty and Integrity > Relevance—Why Add This Item?

Relevance—Why Add This Item?

Sadly, the Enron/Tyco/WorldCom/Global Crossing/Adelphia disasters are responsible for the closest we may have come so far to a complete breakdown in confidence in our accounting/financial reporting systems. As the senior executives of these disgraced companies (and in particular the accounting profession!) have now discovered, honesty and integrity will not go out of style for long in corporate America. Too much is riding on it. Honesty and integrity are particularly important in situations such as yours, where it is an indelible penalty in the eyes of seed investors if you or any member of your team suffer from an image problem in these areas.

Dr. Market’s Observation:

Special circumstances surround entrepreneurs who are ex-convicts. Different rules must apply. They have served their social debt and they are launching a venture that offers employment and possibly riches. The trick is attracting the capital and other resources required for a safe launch. One consideration is the ability to launch an enterprise in such a way as to derive early cash flows and move the later investor’s gaze past the early times, when honesty and integrity would be under heavier scrutiny. In other words, for some people honesty and integrity just might be an “earn-out” over time. We don’t have to look far to uncover bad behavior in society today (it is too often on display in professional sports).



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