Ethics Final: Chapter 6-12

The Global Sullivan Principles

- The aim of the Sullivan Code was to get corporations operating in South Africa to defy apartheid - Black workers were to receive equal pay, opportunity, and respect - Unions were to be recognized and living conditions improved - Sullivan's principles became the Global Sullivan Principles; these principle support justice, advocate recognition of human rights, and encourage corporate social responsibility

Bribery

- The dominant problem for businesses operating in Asia concerns bribes, gifts, and commissions - There is a difference between offering a bribe to expedite business already in train and offering a bribe to influence the awarding of a contract—the latter is corrupt

Professional Codes of Practice

o Three professional accounting bodies (now all under CPA) The certified management accountant Certified general accountant Chartered accountant o All share same fundamental principle Public interest Integrity Objectivity Independence Confidentiality Technical and professional standards Competence and due care Ethical behaviour

UN Global Compact

- The Global Compact is supported by businesses around the world - It "seeks to combine the best properties of the UN, such as moral authority and convening power, with the private sector's solution-finding strengths, and the expertise and capacities of a range of key stakeholders."

The Principles of the Caux Round Table

- The aim of the Caux Round Table is to encourage business to contribute to economic and social development - The CRT "emphasizes the development of continuing friendship, understanding and cooperation, based on a common respect for the highest moral values and on responsible action by individuals in their own sphere of influence." - Two principles involved here: working "together for the common good," and the Kantian sense of human dignity

Controlling and Monitoring

Incentives can be internal or external Internal incentives revolve around executive compensation External incentives are marker driven insofar as they include the market for executive employment In order for shareholders to assess the current state of the corporation they need a constant flow of information • And to achieve this, effective monitoring systems are necessary Monitoring involves mechanisms to oversee and evaluate the performance of managers

Board of Directors

Original purpose: represent the shareholders in overseeing the executive level management Ensure that management was acting in the shareholder's best interest; board of directors are elected by shareholders to represent this purpose Roles include acting as the shareholders agent, hiring and evaluating management, approving major operating proposals, offering advice to management, ensuring the firm's activities and financial condition are accurately reported to its shareholders

Canada and Banking System

Regulation in Canada has historically been more principles based • Many Canadian companies have freely developed and adopted formal codes of ethics; however, regulation in Canada does not require companies to do so o The Canadian bankers association o These codes are not legislated (Canada) and are not a mandatory requirement for membership in the CBA; many banks have internally generated codes of conduct o These measures should not be underestimated, however the example of Canadian banks in the financial crisis attests to their importance o Codes alone are not enough to treat problems; has to be included with other measures like training programs, mentoring, etc; usually just a good starting point

Managerial Temptations (related to Principal-Agent Problem)

Shirking or not working hard Nepotism Exhibiting favouritism in compensation and promotion practices Self dealing and engaging in non arms length transactions Consuming execessive perks Taking no risks or chances in order to avoid being fired Taking excessive risks to earn large bonuses Having a short run horizon if the manager is near retirement

Equality

Equality: differences between individuals should not be used as a reason for treating them less fairly than others - When it comes to equality, certain unequal measures might have to be taken to correct the wrong that has happened over decades and centuries o Key reason that we have four designated groups; want to correct a wrong that has happened over time o Correction mechanism taking place

Shareholder Activism

- Shareholders have the right to vote on critical matters, the right to be heard and to propose shareholder resolutions, and the right to organize and challenge the management of the corporation they have invested in - Shareholders with significant levels of shareholdings have greater power and influence over the management team - Ownership concentration can act as a internal control mechanism influencing the behaviour of management

Sarbanes Oxley Corporate Reform Act of 2002

This act and the regulations under it, strengthen the independence of external auditors Auditors are no longer appointed by senior management, but must instead be appointed by the audit committee of the board and report to this board These reforms specify that a firm cannot offer both auditing and consulting services o This act and the regulations under it, strengthen the independence of external auditors o Same accountancy firm cannot act as a consultant to a company and audit that company as well o Auditors are no longer appointed by senior management, but must.... o Clarke and Dean have critiqued the act, suggesting that shackling auditors' independence to accounting standards will do no more good in the future than it has in the past;... some say it does not go far enough and acts like this can still take place

One Person Corporation vs Crown

- *one person corporation: a corpoation with only one person as a shareholder; common in professional practices ex medical doctors, accountants, lawyers and trades (ex plumbers, electricians - * crown corporation: a corporation that is owned by either a provincial government or the federal government

Affordability

- According to Donaldson, one of the three conditions for a human right is the fairness-affordability test; that is, moral agents are only responsible for actions they are capable of realizing - However, even if a corporation cannot afford to act in a particular context, this doesn't mean those making rights claims don't have a legitimate case - In other words, Donaldson doesn't endorse trading away ethics on the grounds that some actors cannot afford to act - The point is that, if affordability is an issue for a corporation, then it might have to forgo operations in a particular country - Affordability should not trump human rights

Affirmative Action Program

- Affirmative action program: initiated in the US (1970s) because African americans had been discriminated in terms of employment; in order to correct the imbalance, this program was started o Five spots for a job, given all else was equal (skills, qualifications); amongst five candidates, AAP says the African American should be given that position (amongst the white candidates, 1 African American) o Seems like an unequal treatment; but there is a reason (corrective action from the past) o In 2012, seen as illegal and was stricken down; seen as a discriminatory practice o Started to have the effect of reverse discrimination o In areas where the correction did not work, additional investment should be made in those areas in terms of help, education, so they are at par with the caucasian population

Autonomy

- Autonomy is especially important in professional ethics and accounting - Shared decision making: doctors do not provide a specific prescription but will give a number of options and ask what the patient is comfortable with o *class discussion about autonomy when going to the doctor*

Why should you blow the whistle? (4 criteria)

- Bowie and Duska propose the following criteria concerning personal responsibility o The extent of the need o Ones proximity to the person in need o Ones capacity to assist o The availability of others likely to render assistance - Whistle blowers are typically insiders to the organization and, as such, are part of the harm caused by the organization - Felt moral obligation because they had once partaken in that act, for at least a period of time - Blowing the whistle comes with serious consequences which one must be willing to face - Contrary to popular image, the label of "good guy" does not confer protection from these consequences - All too often, one faces losing one's job, being demoted, prosecution, or even marriage failure, alcohol abuse, and bankruptcy

Business Code

- Business code: an established set of principles or rules that operates at the level of an individual business

Code of Ethics

- Code of ethics: a formal statement of an organization's ethical values and principles - Reasons why good business requires the existence of a code of ethics: o A way to avoid external regulation o An effective form of advertising o Builds public trust

Code

- Code: an established set of principles or rules of behaviour - Codes are about self -regulation, not external regulation - Codes should elicit good judgement; they are not a substitute for judgement - Ex: Laws are a set of codes

Codes of Ethics: Aspirational, Judgement, Empowerment

- Codes of ethics are also aspirational o Aspirational: desiring and striving to improve; to be better than the current state o In other words, a code of ethics encourages one to always exhibit excellent judgement- one admits that there is room for improvement in one's judgement and behaviour and so one aspires to do better o Empowerment: also a key element; the delegation of authority for ethical decision making; it is a top down notion Ethical empowerment: the delegation of authority for ethical decision making; top down notion that fosters trust

Two Solutions to the P-A problem

- Controlling and Monitoring Controls take the form of incentives designed to align managerial and shareholder interests ex: buying stock options to get involved and align interests • Incentives can be external and internal • Internal incentives revolve around executive compensation • External incentives are market driven insofar as they include the market for executive driven employment o Performance contrary to the interests of shareholders would reflect poorly on executive, thus decreasing the prospects of future employment Monitoring involves various methods of policing and oversight

Is corruption acceptable in foreign countries?

- Corruption is not acceptable to the citizens of any country o And corruption cannot be accepted on the grounds of commercial necessity or the absence of regulation - Whether bribery is the norm in a particular environment matters not—bribery is a form of corruption and thus unethical - Foreign Corrupt Practices Act: the 1977 US laws prohibiting American corporations from making payments to foreign governments in order to advance their business interests

Double Standard?

- De George argues that the same standards are not always applicable to entrepreneurs and MNCs in international business - He too subscribes to the "ought" implies "can" principle: one cannot do what is not within one's control - Context, De George contends, changes the application of ethical principles - In many countries bribery is commonplace - Each bribe reinforces corruption of the system and introduces injustice - However, the system is not the individual's responsibility; it is a collective responsibility - Accordingly, individuals can assume only so much responsibility - Multinationals have the option of moving their operations elsewhere; local businesses do not—they risk going bankrupt if they fail to comply - Does that mean, then, that local businesses are off the hook when it comes to the issue of bribery? - Do local businesses also have a choice?

De Facto Value System & De Jure Value System

- De facto value system: a value system that exists in actual fact; it is in place and acted upon in good faith, even if not officially codified - De jure value system: a value system that is formally codified - A code of ethics brings the de facto and de jure value systems into alignment: it states where people stand in relation to each other and to entities outside the organization; it sets a level playing field for al practitioners; and it is an instrument for accountability and responsibility, a declaration that certain standards will be observed in its operations - Ex: 2007: city in Germany decided to take down all traffic signs and signals; had more power than the qualified law? Accident rates decreased; observed that drivers were making more eye contact with other drivers to communicate

Designated Groups

- Designated groups o Gender o Visible minorities o Aboriginal o Disability - The reason these four groups are designated is because historically, these groups are the ones which have been systematically discriminated against over the past few decades; data proves this

Ethical Problems in International Dealings

- Ethical Problems in international dealings: o large scale bribery o cultural differences o involvement in political affairs o pricing practices o illegal or immoral activities in a host country o questionable commissions o gifts or favours o tax evasion o inappropriate use of products o traditional small-scale bribery

Frankena's Four Requirements for Ethics (related to whistleblowing)

- Frankena's four requirements of ethics o Avoid evil o Prevent evil o Remove evil o Do good - Whistleblowing is an attempt to avoid, prevent and perhaps remove evil

Glass Ceiling

- Glass Ceiling: an invisible barrier that prevents qualified people from rising above a certain level of rank or salary in business organizations o Unacceptable; mostly used in the context of women hitting a ceiling o Form of bias based on gender, sex, religion, ethnicity, etc o Pay inequity: differential wage/salaries that one person gets compared to the other in the same job Usually in terms of man vs woman

Glass Wall

- Glass wall: cannot move laterally within an organization; ex woman moving from HR to finance department

Corporate Citizenship and Corporate Governance

- Governance mechanisms are designed to reduce conflicts between management and owners - Typically the success of these mechanisms is measured in monetary terms - Such a measure ignored the interests of other stakeholders, such as employees, the natural environment, the community or society - These stakeholder interests are often seen to be in conflict with shareholder interests - Some have employees as part of the board of the directors or community members, etc

Government Oversight and Regulation

- Government oversight and regulation is the most obvious form of external control - Revenue Canada and the provincial securities commissions and exchanges dictate corporate reporting requirements for the purposes of taxation and public disclosure, respectively - Competition bureaus monitor corporate practices to ensure fair and free competition - Legislation influences employee rights, environmental performance and many others - Sarbanes Oxley Act 2002 o Established in response to high profile accounting scandals o An oversight body designed to Regulate public accounting firms Regulate legislation pertaining to corporate responsibility Institute increase punishments for corporate fraud and white collar crime - Ex Enron 2002; due to lack of oversight by governments and regulation - Usually the job of the IRS/CRA to deal with accounting and "fudging" statements; need to make sure reporting is proper; requires lots of expertise - But what if the regulation company is corrupt? Ex Russian Federation for Sports; doping among athletes in Russia; athletic federation is responsible because it has either tried to look the other way or actively participated in the cover up;

Overview of Accounting Profession

- Grew out of the industrial revolution and the use of the limited liability company as the engine of economic growth Era characterized by mass production with machines; consumption by larger group of people; became more industrialized Concept of shareholders of a specific corporation, etc helped economic growth - Traditionally, accountants have enjoyed good public regard for honesty and trustworthiness o Public trusts accountants; helps to grow the economy when it came to financial statements

Protection for Whistleblowers?

- Historically in Canada, protection for whistleblowers is low/has been poor - 2007: Public Accountability Act o The aim was to protect whistleblowers from speaking out against ethical transgressions within government o Few protections exist for whistle blowers in the private sector - Summary dismissal: dismissed there and then, do not give payment in lieu of notice; is it legal? o In certain cases, yes o Based on insubordination

Criticisms of Glass Ceiling

- Some women argue glass ceiling concept is disempowering; others suggest that women respond to corporate frustrations by starting ventures of their own; concept wrongly assumes that women desire the same thing as men (says they are subject to discrimination when they are in fact just making different choices)

Business and Human Rights

- Human rights should not be conditional - Nor are human rights cost free; they require the removal of negative externalities - Negative externality: the external cost of a transaction, not transmitted through prices, that is incurred by a party who was not involved as either a buyer or seller of the goods or services causing the cost or benefit - Economic justifications for ignoring human rights occur all around the globe, including Canada - Companies argue that sweatshop labour is required to be competitive - Such justifications are problematic: they open the door to human rights violations - Human rights are inalienable—one should not be deprived of or alienated from what one has a right to - Corporations and the political - Corporations are not partitioned off from the political - Although they may have limited purposes, this doesn't mean their responsibilities are limited to these purposes - The fact is that corporations are capable of conferring and enjoying political benefits - And thus an unwillingness on the part of those who benefit from exploitation is no ground for moral exemption

Incentive Based Executive Compensation

- Incentive based executive compensation: the use of salary, bonuses, and long term incentives to align managers' interests with shareholders interests ex: performance bonuses, stock options, profit sharing plans and stock purchase plans - Objectives of management and executives can be aligned with stock options; mitigates the principal agent problem - Control lies within management; interests may not be aligned - Giving management some ownership thru stock options, it can help with aligning interests - May not always work o Stock options: can lead executives to artificially inflate share prices in the short term o Performance bonuses: leads executives to focus on performance in which performance is being evaluated to the detriment of long term corporate interests

Industry Code

- Industry code: an established set of principles or rules that operate throughout a whole industry and sets the standards for firms and employees within that industry - Industry Codes in US and Canada - An ethical code must have substance in two ways o The code must actually prescribe something that is identifiable o There must be sanctions attached to the code o In both countries, codes have grown in importance in recent years In the US, there are legislated incentives to develop ethics programs and codes Regulation in Canada has historically been more principles based

Competition and Trust in International Markets

- It is commonplace for people to argue that one cannot both compete and behave ethically o "It's kill or be killed." o This view is mistaken: unethical behaviour cannot be justified on grounds of competitive "necessity" o The survival of a firm should not be jeopardized by acting ethically and indifference to ethics should not be normalized - To normalize purely self interested and unethical behaviour would lead to what Hobbes calls a state of war - Thus, if international markets are to work, then an international legal and normative infrastructure among states is needed

Ethics and Cultural Differences

- Legal standards differ around the globe: what is acceptable in one's home country may not be acceptable in a host country - Differences between countries are usually cultural, economic, and political differences, rather than differences in basic values - It is not unreasonable to suggest, then, that ethics is both universal and rooted in particular contexts - Primary values transcend particular cultures: respectfulness, honesty, trust, integrity, sincerity, loyalty, and diligence - Secondary values are particular: they relate to how the primary values are expressed in particular cultures - Understanding the distinction helps people in business to understand cultural differences and to develop cultural sensitivity and imagination - Consider the example of "face" in Asian societies

Weaknesses in the Board of Directors Model

- Management generally has greater insight than an average shareholder concerning who would make an effective corporate director for the company - Management thus provides recommendations of director candidates to shareholders and shareholders rubberstamp these recommendations - Board can face situation of having to choose between shareholders and management; the temptation is to act in the interests of management instead of the shareholders that they are elected to represent

Market for Capital Control

- Market for capital control: the purchase of a firm that is underperforming relative to industry rivals in order to improve its strategic competitiveness - Executives who fail to act in the best interests of the corporation are often subject to capital control due to the decreased profitability and resulting loss of share value - Reduced share value increases likelihood the firm will be a target of takeover, often executives get fired

The Market for Executive Employment

- Market for executive employment: an external control that naturally motivates corporate executives to act in the best interests of the shareholders in order to maintain or increase their desirability in the external job market - Executives with a track record of increasing corporate profitability and shareholder value will command higher salaries, while executives who are perceived to not act in the best interests of shareholders will experience a lowering of their career prospects

Environmental Responsibility and Friedman

- Milton Friedman: businesses have obligations to shareholders and the law - Environmental responsibility is an aspect of social responsibility and that is that mandate of government, not business - However, Friedman would contend that corporations should act with social responsibility if doing so enhances the bottom line o Social responsibility is good for a corporation's reputation o In today's world, this really matters - Commonly held property or resources are often subject to the "tragedy of the commons" o Since the commons belongs to everyone, individuals do not have enough incentive to care for its upkeep o Even worse, since there is no specific individual harmed the commons is conceived as something to be freely used at will, even if that means polluting the air and water

Professional Code

- Professional code: an established set of principles or rules that operates throughout a whole profession and sets the standard for its practitioners

What is the idea behind anti discrimination laws?

- The idea of equality behind anti-discrimination laws, equal opportunity and affirmative action is fairness - Moral equality: differences between individuals should not be used as a reason for treating them less fairly than others - If people are worthy of respect, there is an obligation to put them into a position to give their best - Hence, to satisfy the demands of fairness, people who are disadvantaged must be sometimes treated "unequally" ex: providing resources to those who are in need or denied opportunities and whose disadvantages prevents them from attaining social norms such as a certain level of education or employment

The Problem in the Environment

- The tragedy is increasingly clear: the earth's resources are at their carrying capacity because of the demands and changes we have made on them - While the environment does not belong to anyone, this does not mean people's rights are not violated by excessive exploitation and abuse - The harms of environmental degradation are born by present and future generations - Unfortunately, these harms are not reflected in the prices of goods and services - Prices should reflect social costs, not just private costs - This would lead to more informed socially responsible decision making - The environment is thus a matter of ethics, where and upon whom, the costs of environmental harm fall is a matter of justice

Why does this matter?

- The utility is o There are federally mandated programs which are administered so various companies can try to rectify some of the imbalance in terms of the work force, related to these four groups Company becomes a part of the program; federal government assists in helping the situation o Collect data for the HR; when an application has this group, the HR must raise a red flag saying that we have an applicant from the groups, since there is a history of discrimination, it is the job of HR to make sure they do not discriminate; keep track to ensure no discrimination; history of that occurring - In the US, 3/5 rule

Accountant Reputation (Enron Scandal)

- This reputation suffered in the wake of the Enron collapse in 2002 o Money that the company had in debt were not shown as part of the financial statements; loopholes which they took advantage of and the accountants were able to hide the debts that Enron owed; thereby, the shareholders thought the company was very profitable o Survey after Enron regarding the trust for accountants in general; people had 0% trust o Congress passed the Sarbanes-Oxley Corporate Reform Act of 2002

Transparency International

- Transparency international is best known for its Corruption Perception Index - The CPI ranks countries according to the likelihood that its public officials will accept bribes - Its greatest criticisms are directed towards multinationals and their propensity to engage in corrupt practices - Since 1999, there is also the Bribe Payers Index; this is an index of the propensity of business to offer bribes in order to keep business in developing countries

Two other Benefits of Codes

- Two other benefits are o A specific requirement can take the heat off a specific employee o A specific requirement can help the organization with respect the to public trust - A code also forces us to think through what are values are

Continued

- While judgments about corruption are influenced by cultural factors, surveys show that there is considerable cultural overlap regarding corruption - Companies bring new skills and processes to foreign countries—in other words: what is lacking, they build o And the same holds for ethics: where an ethical infrastructure is lacking it too can be built - But building such an infrastructure requires sensitivity; it is important that home country standards not be imposed - The traditions and values of the host country must be respected - It is difficult for MNCs to compete in an unfair marketplace o For all businesses to be on an equal footing, public policy should enforce rough equality among competitors - Nevertheless, even if there isn't such equality, it is moral evasion to justify unethical conduct by appeal to competitive necessity - Like individuals, companies are required to make sacrifices at times—profits do not trump morality - In other words: the operating environment is no justification for unethical behaviour

Internal Whistleblowing

- Whistle blowing usually begins internally- information is reported to supervisors in the organization - Internal whistleblowing: blowing the whistle inside the organization; reporting concerns outside the normal channels of authority, but still not going public (not reporting outside the organization" o If this fails, someone usually reports higher up (internal reporting) o If both fail, the next stage involves riskier option, seeking external intervention- for example, a senior public authority may be informed or one may go to the media - Internal reporting is simply part of the normal feedback channels of an organization; whistleblowers are ranged against corporate closure: a form of mutual protection that can cause members of an organization to intimidate, scapegoat or expel dissidents who disturb its unspoken rules; so when internal reporting fails, whistle blowing is a last resort - - Whistleblowing is more than disclosure of information; it involves achievement, namely the public exposure of the organization; if there are adequate reporting systems in an organization, whistleblowing must be restricted to very serious cases

Whistleblowing

- Whistleblowing: the act of making public, matters that organizations have ignored or kept hidden, but which constitute a significant wrong or an immediate danger - It is usually done with a view to protecting the public from harm or protecting employees or others from organizational disregard for their safety or well being

Accountibility vs Responsibility

Accountability: historical track, check the box, reveals liability, focus on process and procedures Responsibility: proactive, "take responsibility for", discretion, ethical empowerment, ethical authorization

Code of Ethics vs Code of Conduct

Code of Ethics - General - Values/principles - Judgement - Empowering - Aspirational Code of Conduct - Specific - Prescriptions/Directives - Uniformity - Enforceable statements of specific behaviours

Sexual Harassment

o Harassment: continual pestering or bullying o Sexual harassment: continual pestering, unwanted attention of a sexual nature, often associated with abuse of power

The Precautionary Principle

o "where an activity raises threats to the environment or human health, precautionary measures should be taken even if some cause and effect relationships are not fully established scientifically" This principle operates in areas where there is real concern about harm but insufficient scientific evidence It reverses the burden of proof by saying "prove that activity is not dangerous" o Corporatons are thus forced to ask: what could go wrong? What systems do we need to minimize risk? What do we do if something goes wrong?

Diversity

o Accordingly, Canada prides itself on equal treatment with regard to gender, sexual orientation, and ability/disability, as well as religion, race, ethnicity, language, and culture o Surveys show that Asian men are earning the most for the same kind of job than Caucasian men, in the US o Asian women are below all; huge gender gap for wages

Accountability

o Accountability: the requirement to justify decisions in terms of the delegated powers and authority of ones roles Relates to the rules and regulations related to the decision making based on the powers that have been delegated on you (differs from empowerment as its left to the judgement of the employee on whom the ethical decision making powers have been delegated to Focusing on accountability is like focusing on rules and regulations rather than judgement; it belongs with codes of conduct Ethical failures often call for more regulations o The attraction of rules is that they provide a quick fix o But there are no quick fixes; in the end, as Aristotle said, all rules still need to be applied and there is no rule for that- only good judgement o Accountability systems signal a diminution of an environment of trust o This is for better and worse Accountaibility systems have the advantage of keeping track of what people are doing and what they are supposed to be doing However, they have the disadvantage of not creating and nurturing good judgement They keep track of the norm buy fail to look at anything else And it is in the "anything else" that excellence b elongs

Code of Conduct

o An established set of specific and enforceable ethical prescriptions, which eliminate the uncertainty, variability and the necessity of judgement and discretion of a code of ethics o Are enforceable; meaning if there is no compliance with this code, there can be reprecussions or consequences o Difference between conduct and ethics: enforceable with consequences o "what should they do" while code of ethics is "what they want to be"/organizational culture

Types of Discrimination (5)

o Benign or commendable: nothing to worry about; ex: I make friends with people who are very good cooks, may not like to be friends with those who are not good cooks; discriminatory in terms of making friends but it is benign or does not matter to society o Invidious: objectionable but not illegal; making friends with only Hispanic people; objectionable as to why you are doing it but not illegal o Formally intolerable: regulations against it o Indirect: the result of some activity without being the aim of that activity; ex: level of physical endurance required for firefighting is a level which most women can not reach; threshold is so high that most women would not qualify to do this (also known as systemic discrimination); need to look out for this**; practices or regulations that lead to discrimination in one way or the other Unless BFOR; and it is allowed legally to discriminate on the basis o Direct: the intent to discriminate; o Other forms of discrimination include: overt and concealed, intended or unconscious, singular or systematic

Ethical Issues faced by Accounting Professionals

o Client proposals for tax evasion o Client proposals to manipulate financial statements o Conflicts of interest o Presenting financial information so as not to deceive users o Failure to maintain technical competence o Coping with instructions from superiors to behave unethically o Integrity in admitting one's mistakes o Using insider information for personal gain maintaining confidentiality

Corporate Governance

o Controls put in place to ensure a government acts in a legal, ethical and transparent manner in the best interest of shareholders o It can also be defined as a relationship among stakeholders that is used to determine and control the strategic direction and performance of an organization o CG addresses the problems that arise in the separation of ownership and control, which is a defining feature of a corporation o Does not always happen unfortunately

De George's Guidelines for Operating in a Host Country

o Do no intentionally direct harm o Benefit the host country and contribute to its development o Respect the human rights of its workers o Respect the values, culture, and laws of the host country o Pay their taxes o Assist in the building of just background institutions

Workplace Discrimination

o Employers are responsible for fostering a safe buy also non threatening working environment o Harassment and bullying in the workplace is thus an employer responsibility, not merely a matter of personal relations

Employment Discrimination

o Employment is considered a right in most industrialized societies o Unemployment is a serious individual and social problem o And the same holds of the work environment o Employers who merely restrict themselves to the letter of the law will not achieve fair hiring and promotion policies, a safe workplace, or a confident and fully productive workforce

Benefits of Equal Opportunity Programs

o For business, cost is an important aspect of Equal Opportunity Programs However, focus on cost ignores the benefits of such programs not only to individuals but also to commerce, industry, and the community o Such programs also remove prejudices Prejudices obscure respect for persons and limit the capacity to assess their abilities Thus prejudice is not only morally objectionable; it is bad for business

Why is independence important for the accounting profession?

o In the case where external certification of a company's financial position is being provided, those who stand to gain by the accountant's declarations should not influence or prejudice the result Equally important is that the accountant not have interest in the company or stand to profit from the outcome of financial scrutiny o Independence is necessary in order for someone in a profession to act ethically and with integrity, and accountants must do this in a special way to do their job

Conflict of Interest

o Independence is concerned with avoidance or management of conflicts of interest o Most businesses and professions have mechanisms for dealing with conflicts of interest o Most conflicts occur at the individual level and arise through misunderstanding of what a conflict of interest is o A person having a conflict of interest is different than someone who is affected by a conflict of interest o Therefore, you have a conflict of interest if you have competing professional, business or personal interests o One should manage conflicts of interest by being as transparent as confidentiality and prudence allow; by reporting interests to superiors and seeking their advice; and by documenting decisions fully o Self interest or partiality to the interests of others can compromise one's fiduciary duty and bias one's judgment o Impartiality of judgment is thus central to the management of conflicts of interest

Disability

o It is common to talk of people with disabilities rather than talk of handicapped or disabled people o Such talk reflects a recognition that one should stop identifying the whole person with the particular disability she or he has o For with the appropriate assistance people with disabilities make a valuable contribution to the workplace o Employers have an obligation to know something about disabilities so that potential employees are not prejudged as not being capable of doing a job o In Canada such responsibilities are supported by a legislative framework: the Canadian Charter of Rights and Freedoms, the Canadian Human Rights Act, the Employment Equity Act o The Employment Equity Act requires employers to modify the workplace to accommodate the person with the disability, provided the costs are not unreasonable. o Claims of unreasonableness must be backed up with evidence

Objections to Whistleblowing

o It is informing on one's peers or mates, and so has the potential to destroy trust in the workforce o It involves disclosing information owned by the organization, not individuals o It is arrogant, and puts at risk the organization and the jobs of employees o The whistleblower doesn't always have the full picture and so cannot judge whether disclosing information is in the public interest o The act breaks an employee's contract o An employee has a duty to report concerns to superiors

Voluntary Action

o Management voluntarily engages with environmental policy for a variety of reasons- an example is the green challenge Companies voluntarily audited as a form of self regulation designed to forestall government action o Another example is triple bottom line reporting; an attempt to merge profits and social responsibility This reporting has been promoted through the global reporting initiative begun by the coalition for environmentally responsible economies

The Naturalistic Argument

o Nature has intrinsic value o Humans have no dominion over nature, no unqualified right to harm or extinguish the lives of plants and animals or the ecosystems which support them o Environmental ethicists thus want more than protection for economically valuable and life-sustaining resources; they want respect for the natural world and so a naturalistic ethic This is not a "good environmental ethics is good business" The environment must be respected for the right reason, and that is, having intrinsic worth o Peter singer argues that as sentient beings, animals have interests that deserve considerations To disregard those interests is speciesism, and this is no different than racism, it is arbitrary Bias toward your own species Such a bias is ungrounded: humans and animals are the same in having the capacity to suffer The interests of animals thus count morally because animals have intrinsic value

Intergenerational Issues

o No generation has an unfettered right to use the world's resources to its own advantage at the expense of future generations But why do we have moral obligations here? o John rawls argues in support of a "just savings principle": ech generation should preserve the social and economic gains received and put aside for future generations what is received from its predecessors This has implications for the use of non renewable resources and energy, the production of waste and pollution

Grounds of Discrimination

o Prohibited grounds of discrimination Age Sex Gender Religion Origin

Corporations

o Public vs private (shares are widely held by general public vs not traded publicly) o Shareholders elect board of directors, who hire presidents, treasurers, secretary, officers (top management) o Limited liability o Ease of transfer of ownership o Unlimited life o Ability to attract financing o Ability to attract eployees o Double taxation of profits o Cost/complexity of formation

What counts as genuine whistleblowing?

o The matter must be serious and solid evidence required o The information must be public benefit and the public has a right to now o Less damaging ways of resolving the problem must not be available o If other ways of resolving the problem were available they should have been tried o Blowing the whistles is likely to be the resolution to the problem

Two Considerations before Whistleblowing

o The public interest must be threatened by some policy or procedure o Employees of the organization have attempted to resolve the problem - Argues that after these considerations, employees have an obligation to blow the whistle - Also raises dirty hands issue as it involves betrayal of friends, stressing ones family, and hurting the good as well as the bad

Principle Agent Problem

o The separation of control and ownership gives rise to the principal agent problem" represents the conflict of interest between the principal and the agent Principal: a person or entity first in rank of importance or level of ownership (shareholders) Agent: a person or entity that represents the interests of another party (managers or executives)

Two views of Professionalism

o Those practicing in a profession must regard the public interest as their first priority o Professionals obtain their status by serving their clients and emloyers- regulation and law, not personal morality, is the appropriate constraint

The Humanistic Argument

o Without a clean environment, human health will be harmed and without a natural world with a diversity of species, human life will be diminished o Without a stock of renewable resources for future generations, the lives of future generations will be of a poorer quality than our own o William Blackstone argued that, if everyone has a right to a livable environment, then others have an obligation to allow the free enjoyment of this right o This right trumps the right to property on the ground that we cannot live or flourish without a clean environment o An extension of Kant's point: if treating people with respect entails respecting those things necessary for their well-being, then we must respect nature