Ethics

Sarbanes-Oxley Act (2002)

Increased accounting regulations

Facilitation payments:

Legal as long as they are small

Observed Misconduct In The Workplace

Misuse of company resources, Abusive behavior,Harassment, Accounting fraud, Conflicts of interest, Defective products,Bribery, Employee theft

challenge of determining an ethical issue in business

Most ethical issues become visible through stakeholder concerns Determining ethical issues is a challenge Changing societal standards over time The ethical decision making process starts when ethical issue awareness occurs and a discussion begins

1. Business ethics focuses mostly on personal ethical issues.

No. Business ethics focuses on organizational concerns (legal and ethical—employees, customers,suppliers, society)

6. Investments in business ethics do not support the bottom line.

No. Ethics initiatives create consumer, employee, and shareholder loyalty and positive behavior that contribute to the bottom line.

5. The trend is away from cultural or ethically based initiatives to legal initiatives in organizations

No. Many businesses are communicating their core values to their employees by creating ethics programs and appointing ethics officers to oversee them.

Reciprocity:

Occurs when an action that has an effect upon another is returned

Morals:

Refer to a person's personal philosophies about what is right or wrong Morals are personal and singular

Moral intensity:

Relates to a person's perception of social pressure and the harm his/her decision will have on others

Corporate Governance

Research shows corporate governance has a strong positive relationship with social responsibility

JFK's Consumer Bill of Rights— a new era of consumerism are

Right to safety, to be informed, to choose, and to be heard

The Federal Sentencing Guidelines for Organizations (FSGO) in 1991

Set tone for compliance Preventative actions against misconduct A company could avoid/minimize potential penalties

stakeholder orientation

The degree to which a firm understands and addresses stakeholder demands

Corporate governance

The formal system of accountability and control of ethical and socially responsible behavior

Active bribery:

The person who promises or gives the bribe commits the offense

2. Business ethics deals with right or wrong behavior within a particular organization.

Yes. That stems from the basic definition.

Secondary stakeholders:

do not typically engage in transactions with the firm and are not essential to a firm's survival examples:Media, trade associations, and special interest groups

Aframework for ethical decision making

does not describe how to make ethical decisions

Gatekeepers are

include accountants who are essential to certifying the the accuracy of financial information.

Ethics

is a part of decision making at all levels of work and management

ethical issue

is a problem, situation, or opportunity that requires an individual or group to choose among actions

Commission lying

is creating a false perception with words that deceive the receiver

Omission lying

is intentionally not informing channel members of problems relating to a product that affects awareness, intention, or behavior

Reputation

is one of an organization's greatest intangible assets with tangible value

Interlocking directorate

is the concept of board members being linked to more than one company

Four levels of social

responsibility Economic Legal Ethical Philanthropic

Business Ethics

Comprises organizational principles, values, and norms that may originate from individuals, organizational statements, or from the legal system that primarily guide individual and group behavior in business

Institutionalization of Business Ethics

Continued support for self-regulation and free trade

Stakeholders are

Customers,Investors, Employees,Suppliers, Government agencies,Communities

Values:

Enduring beliefs and ideals that are socially enforced

ethical decision making process includes

Ethical issue intensity Individual factors Organizational factors

Puffery:

Exaggerated advertising claims, blustering, and boasting Can be difficult to distinguish from fraud

conflicts of interest

Exist when an individual must choose whether to advance his/her personal interests, those of the organization, or some other group

Defense Industry Initiative on Business Ethics and Conduct (DII)

Foundation for the Federal Sentencing Guidelines for Organizations to come in the 1990's

Stakeholders role

Helps identify internal and external stakeholders Helps monitor and respond to needs, values, and expectations of stakeholder groups

Normative approaches:

How organizational decision makers should approach an issue

Why study business ethics

1)Having good individual morals is not enough to stop ethical misconduct 2) Helps to identify ethical issues when they arise and recognize the approaches available to resolve them

Literally false:

Claims can be divided into tests prove (establishment claims) and bald assertions (non-establishment claims)

Dodd-Frank Wall Street Reform and Consumer Protection Act (2010)

Aimed at making the financial industry more transparent/responsible

Implied falsity:

An advertising message that misleads, confuses, or deceives the public

Passive bribery:

An offense committed by the official who receives the bribe

Social Responsible

An organization's obligation to maximize its positive impact on stakeholders and minimize its negative impact

abusive and intimidating behavior

Can be physical threats, false accusations, profanity, insults, harshness, ignoring someone, or unreasonableness

misuse of company resources

Can range from unauthorized use of equipment and computers to embezzling company funds Time theft costs organizations hundreds of billions in lost productivity annually

Principles:

Specific and pervasive boundaries for behavior that should not be violated Human rights, freedom of speech and justice

Optimization:

The tradeoff between equity and efficiency

Stakeholders:

Those who have a stake or claim in some aspect of a company's products, operations, markets, industry, and outcomes

Ethical culture:

acceptable behavior as defined by the company and industry

Corporate social responsibility -

an organization's obligation to maximize positive impact and minimize negative impact on stakeholders

Primary stakeholders:

those whose continued association is absolutely necessary for a firm's survival examples:Employees, customers, investors, governments, and communities

4. Business ethics contributes to investor loyalty

yes. Many studies have shown that trust and ethical conduct contribute to investor loyalty.

3. An ethical culture is based upon the norms and values of the company

yes. Norms and values help create an organizational culture and are key in supporting or not supporting ethical conduct.