Firms in the United States are bound to convey their business ethically in all aspects. Although the Code of Ethics and Standards of Professional Conduct outlines the fundamental values that all companies must abide by, there are situations where legal intervention is required. The American Telephone and Telegraph (AT&T) firm is not an exception, as there have been multiple scandals involving it in the past several years (Bode, 2021). The alignment of AT&T’s activities with the Chartered Financial Analyst (CFA) Institute’s guidelines is paramount for its reputation. Otherwise, AT&T investors’ dissatisfaction with its performance may lead to further financial issues. This essay will discuss the event that occurred in the late 2010s and involved AT&T and Apollo Global Management.
In the struggle to acquire a competitive advantage, AT&T made a series of critical mistakes that tarnished its reputation. In 2019, it became publicly known that the firm was illegally boosting its DirecTV subscriber count by signing up its customers for additional services that were not authorized by AT&T itself (Merkle et al., 2020). It became apparent that the firm was struggling financially and required significant restructuring. During and especially after the incident, the company accumulated a major debt that it was struggling to repay (Kuntz, 2022). Such a questionable strategy made AT&T an unfavorable target for investments. Simultaneously, the proposal by Apollo Global Investment to sell DirecTV came to light after the inflated subscriber numbers temporarily boosted the firm’s asset value (Moynihan & Gasparino, 2019). This move may be considered market manipulation, as DirecTV apparently was not as popular as it claimed to be.
The intention to drop DirecTV might also be interpreted as a conflict of interest between the investment company and AT&T, which stems from the latter’s unethical manipulations. In such a case, the business and its stakeholders must develop their trust in the organizational practices (Casonato et al., 2019). Similar suggestions must always come with an extensive review of the viability of a sale for all involved sides.
The appropriate reaction to such a situation would be a legal prohibition of selling said asset for a set period. In order to resolve the issue, AT&T must outline the exact discrepancy between the real and fake subscriber numbers publicly and abstain from selling said assets for several years. In turn, Apollo Global Management must reevaluate its proposal to accommodate these statistics in order to satisfy the necessity to provide a reasonable basis for investment analysis (CFA Institute, 2014). For the time being, DirecTV must be managed without keeping such an intention in perspective. Resolutions for market manipulation require AT&T to repair its legitimacy through a drastic shift in reporting practices and findings disclosure (Casonato et al., 2019). Corporate reputation has suffered due to the event, and the representation of the upcoming changes must return faith in AT&T’s activities.
In conclusion, AT&T and Apollo Global Management have to postpone their sale of DirecTV to rethink the situation after the previous unethical behavior from AT&T that inflated the value of this asset. As a communication company, AT&T must find a way to communicate its new preventive measures and view DirecTV as a vital part of the firm’s structure to prevent further accusations of manipulation that will only subtract the asset’s worth. Lost legitimacy must be repaired through new reporting practices, clear communication with stakeholders, and open public relations.
References
Bode, K. (2021). Whistleblower says AT&T has been ripping off US schools for a decade. Techdirt. Web.
Casonato, F., Farneti, F., & Dumay, J. (2019). Social capital and integrated reporting: Losing legitimacy when reporting talk is not supported by actions. Journal of Intellectual Capital, 20(1), 144–164. Web.
CFA Institute. (2014). Code of ethics and standards of professional conduct. Web.
Kuntz, K. N. (2022). United States v. AT&T, Inc.: Mega-merger or mega-monopoly? Journal of Business & Technology Law, 17(1), 113–142. Web.
Merkle, A. C., Hair, J. F., Ferrell, O. C., Ferrell, L. K., & Wood, B. G. (2020). An examination of pro-stakeholder unethical behavior in the sales ethics subculture. Journal of Marketing Theory and Practice, 28(4), 418–435. Web.
Moynihan, L., & Gasparino, C. (2019). Exclusive: Private equity proposal for AT&T spin-off of DirecTV could give Apollo sliver of telecom company. Fox Business. Web.