dear everyone Views are invited. B. Venkatesh My friend, who still holds shares in Satyam, wondered why the former chairman did something so damaging as to bring down a company that he himself founded. Behavioural psychology provides an explanation to what could have transpired inside the head of Satyam's former boss when he decided to fudge the accounts. And it has to do with self-justification. How?
Suppose it is time to file your Income-tax returns. Will you righteously declare all your income and account only genuine deductions? If your answer is yes, then you are indeed one in a million who are "holier than thou". Drawing a moral line Typically, you may choose not to declare some income that may not amount to much. Or you may debit an expense that is genuinely unrelated to business. Why? You and I draw a moral line and justify such moves. For one, we say that the income is genuinely small and we anyway donate the proceeds to some orphanage. For another, the government squanders the tax-payers money in wasteful projects. So, why bother? Self-justification, indeed, starts small. After a while, debiting small unrelated business expense or leaving out some income stream becomes a habit. That is because our self-serving mind makes us believe that what we doing is, indeed, right. Gradually, it blossoms into something big. One step at a time Importantly, self-justification works only if it is taken one small step at a time. Initially, it is an income stream that accounts for, say, less than one per cent of total income. Gradually, it adds up until it shaves off 30 per cent or more of our total income! We, of course, do not know what prompted Satyam's former chairman to do what he did. But self-justification can well provide an explanation for his behaviour. Perhaps, he cooked the books for some economic reason. And soon it got big, as he took one step at a time to cover the trails. Interestingly, self-justification is so deceptive that everyone can observe the mistake, except the person committing it! That is why none of us are conscious hypocrites. (The author is an investment strategist. [email protected]) http://www.thehindubusinessline.com/iw/2009/01/18/stories/2009011850861400.htm ekamber --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups "Kences1" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [email protected] For more options, visit this group at http://groups.google.com/group/kences1?hl=en -~----------~----~----~----~------~----~------~--~---
