Tyco International was founded in 1960 and was regarded as an important electrical and electronic components provider, fire protection system maker and electronic security service provider. It is a diverse producing and serving corporation. Tyco has done business in over 1000 locations in 50 countries and hires 69,000 employees around the world (TYCO, 2012). Tyco International has expanded rapidly and broadly since its IPO in 1973 and has numerous companies among the Fortune 500. The firm’s revenue increased from $3.1 billion in 1992 to over $40 billion in 2004, with the firm’s market value estimated at over $100 billion (TYCO, 2012). Tyco has made numerous acquisitions, including 40 acquisitions since the 1980s.
1.1. A Diversified Company
Fire and Security Services: This division is made up of two sub-divisions: electronic security services and fire protection contracting and services. The security services industry is highly competitive in North America. In the fire protection industry, Tyco competes with hundreds of local or regional business for contracts in North America.
Electronics: This division is made up of two sub-divisions: electronics and telecommunications. The electronics industry is highly competitive; Tyco competes with both smaller and larger companies. In the competitive telecommunications sector, Tyco focuses on maintenance services on existing systems and selling bandwidth capacity.
Health Care: Tyco Healthcare Group consists of seven primary business units: medical, surgical, respiratory, imaging, pharmaceutical, retail and international. This industry is less competitive on a local scale. Primary competitors include Johnson & Johnson, Becton Dickinson and C.R Bar...
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...any today. In the years leading up to 2002, Tyco took full advantage of the subjectivity of the accounting in practice. Through various creative accounting practices, such as spring-loading, illegal sale of company shares for personal use, and a low-to-no interest employee loan incentive program, authoritative corporate figureheads misrepresented the firm to investors. The lessons that can be extracted from the proceedings of this scandal are the following: the intentions of a firm’s figurehead can have an effect on the firm’s financial statements; and corporate governance and a healthy corporate culture are paramount to best business and accounting practices. The Tyco accounting scandal very closely preceded the introduction of the Sarbanes-Oxley Act of 2002 that effectively aimed to protect investors in increasing firms’ and financial preparers’ accountability.
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