Adelphia Case

Topics: Board of directors, Fiduciary, Conflict of interest Pages: 2 (493 words) Published: November 19, 2010
Adelphia Case Assignment
Kirstie Fehrenbach
BUS 101 AH

1. The owners are the primary stakeholders in this case.
2. I know that the owners are the primary stakeholders because the illegal inside dealings that the Rigas family was involved with negatively affected not only themselves, but also their other shareholders. The most obvious illustration of this blowback is the arrest of Rigas family members and the bevy of lawsuits brought up against them by other shareholders. Consequently, the inside trading caused them to fail in their fiduciary obligations to the shareholders. In simpler terms, they were taking money out of the shareholders’ pockets. The protection of owner interest was violated in the aspect that Adelphia lied about their financial records, however many were protected when they chose to sue. 3. The owners’ interests are solely to make money, typically in the form of value appreciation over time. 4. The Board of Directors sets strategy, oversees day-to-day operations, and reviews management performance. However, the Board of Directors primary responsibility is to uphold the company’s fiduciary obligation to investors. The fiduciary obligation states that the Board of Directors has a duty to act in the interest of investors. For example, they must account for funds, they cannot have a conflict of interest, etc. 5. In this case, the Board of Directors did not act in the best interest of the owners. This is obvious because a majority of the Board was comprised of members of the Rigas family, all of which had taken advantage of their “personal piggy bank.” This in itself violated the duty of loyalty (conflict of interest) in addition to the principle of good governance that states outside directors should be selected to fill most positions. Furthermore, the chairman of the board also happened to be the CEO, which goes against the principles of good governance. 6. The owners of Adelphia did not act appropriately to protect their own...
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