Merge Healthcare Incorporated's Accounting Scandal: Was the Rightsizing Right?

Merge Healthcare Incorporated's Accounting Scandal: Was the Rightsizing Right?

written by M.V. Vivek, fl. 2009 (Hyderabad, Telangana: IBS Case Development Centre, 2009, originally published 2009), 13 page(s)

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Abstract / Summary
This structured assignment is to accompany the case '410-009-1'. The abstract of the case is as follows: This case analyses the ethics of rightsizing decisions and the general rightsizing practices in business corporations. It specifically looks into the issues of accounting scandal and rightsizing at Merge Healthcare Incorporated. With its humble beginning in 1987 as a medical imaging technology company, Merge's initial growth was dull. Soon, recognizing the increasing interests of investors in health care organisations and the possibilities, it became a public company in 1998. Merge's share value reached an all time high during 2002-2005. This led to speculation among investors about the unfair accounting practices in the company. Merge struggled over many class action lawsuits and an independent investigation forcing the top executives to resign and the company took a deep plunge in the share market. Merge's hard earned image deteriorated and losses started haunting the business. Merge had to cut costs and they decided to reduce the workforce. During 2006-2008, the company cut jobs thrice as part of its rightsizing program. It was only after the third rightsizing that the company started to recover. Soon the company came out of the blues, started expansion, made new acquisitions and of course, started hiring. Although the company recovered, the question remains - does a company really have to undergo rightsizing to come out of the financial trouble? This case can be used to: (1) understand the difference between the concepts of rightsizing and downsizing and to examine the situations that lead to rightsizing; (2) understand the rightsizing of Merge Healthcare and its immediate after-effects; and (3) analyse the ethical side of rightsizing decisions.
Field of Interest
Business & Economics
Author
M.V. Vivek, fl. 2009
Copyright Message
Copyright © 2009 by IBS Center for Management Research
Content Type
Case study
Format
Text
Original Publication Date
2009
Page Count
13
Publication Year
2009
Publisher
IBS Case Development Centre
Place Published / Released
Hyderabad, Telangana
Subject
Business & Economics, Social Sciences, Corporate Governance, Accounting, Organizational change, Executives, Job resignations, Scandals, Accounting, Medical Equipment and Supplies Manufacturing, Governança Corporativa, Gobierno Corporativo, Contabilidad, Contabilidade, United States of America, USA, US of A, America, Estados Unidos, Merge Healthcare, United States, Business Ethics
Keywords and Translated Subjects
Governança Corporativa, Gobierno Corporativo, Contabilidad, Contabilidade, United States of America, USA, US of A, America, Estados Unidos

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