Business ethics


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Business ethics

  1. 1. Business Ethics Dr. Roxana Marinescu
  2. 2. <ul><li>If a company’s main purpose is to maximize its returns to its shareholders; where is business ethics in this process? </li></ul>
  3. 4. C(orporate) S(ocial) R(esponsibility ) <ul><li>Also called: corporate responsibility, corporate citizenship, responsible business and corporate social opportunity </li></ul><ul><li>Is a concept whereby companies consider the interests of communities by taking responsibility for the impact of their activities on all the actors involved: customers, suppliers, staff, shareholders, stakeholders, the environment </li></ul>
  4. 5. CSR <ul><li>The relationship between a company and its shareholders, company and employees, company and competition, company and suppliers, clients, etc. </li></ul><ul><li>Leadership, corporate governance </li></ul>
  5. 7. Ethical issues in Accounting and Finance <ul><li>Creative accounting and earnings management </li></ul><ul><li>Misleading financial analysis </li></ul><ul><li>Insider trading </li></ul><ul><li>Securities fraud, stock fraud, investment fraud </li></ul><ul><li>Bucket shops </li></ul><ul><li>Forex scam </li></ul><ul><li>Executive compensation </li></ul><ul><li>Bribery, kickbacks, facilitation payments </li></ul>
  6. 8. Creative accounting and earnings management <ul><li>Euphemisms referring to accounting practices that may follow the letter of the rules of standard accounting, but certainly deviate from the spirit of those rules </li></ul>
  7. 9. Creative accounting and earnings management <ul><li>characterized by excessive complication and the use of novel ways of characterizing income, assets, or liabilities and the intent to influence readers towards the interpretations desired by the authors </li></ul>
  8. 11. Misleading financial analysis <ul><li>to obtain money by misdirecting people to invest in a stock market bubble (when price of stocks rise and become overvalued by any measure of stock valuation), profiting (or assisting others to profit) from the increase in value, then removing funds before the bubble collapses, for instance in a stock market crash </li></ul>
  9. 12. Misleading financial analysis <ul><li>Used to misrepresent the organization, its situation or its prospects </li></ul><ul><li>Regulators are supposed to prevent such fraud </li></ul>
  10. 14. Insider trading <ul><li>the trading of a corporation’s stock or other securities by individuals with potential access to non-public information about the company </li></ul>
  11. 16. Securities fraud, also known as stock fraud and investment fraud <ul><li>A practice in which investors make purchase or sale decisions on the basis of false information, frequently resulting in losses, and in the violation of the securities laws </li></ul>
  12. 18. Bucket shops <ul><li>Now applied to any fraudulent stock-selling operation, which has an undisclosed relationship with the company being promoted or undisclosed profit from the sale of house stock being promoted </li></ul><ul><li>A bucket shop promotes (via telephone or email) thinly traded or even fraudulent investments </li></ul>
  13. 19. Forex scam <ul><li>Any trading scheme used to defraud individual traders by convincing them that they can expect to gain a high profit by trading in the foreign exchange market </li></ul>
  14. 20. Executive compensation <ul><li>Excessive payments made to corporate CEO's and top management </li></ul>
  15. 22. The ethics of human resource management (HRM) <ul><li>Covers those ethical issues arising around the employer-employee relationship, such as the rights and duties owed between employer and employee </li></ul>
  16. 23. The ethics of human resource management (HRM) <ul><li>Discrimination issues: discrimination on the bases of age, gender, race, religion, disabilities, weight and attractiveness. Affirmative action is implemented </li></ul><ul><li>Issues surrounding the representation of employees and the democratization of the workplace: unions, strikes </li></ul>
  17. 24. The ethics of human resource management (HRM) <ul><li>Issues affecting the privacy of the employee: workplace surveillance, drug testing </li></ul>
  18. 25. Issues affecting the privacy of the employer: whistle-blowing
  19. 26. The ethics of human resource management (HRM) <ul><li>Issues relating to the fairness of the employment contract and the balance of power between employer and employee </li></ul><ul><li>Occupational safety and health. </li></ul>
  20. 27. Employee raiding/head hunting
  21. 28. International business ethics <ul><li>Fair trade/community trade </li></ul><ul><li>Biopiracy </li></ul><ul><li>Child labour </li></ul>
  22. 29. International business ethics <ul><li>Cultural imperialism </li></ul><ul><li>Conflicting interests </li></ul><ul><li>Ethics officers (&quot;compliance&quot; or &quot;business conduct officers&quot; ) </li></ul>
  23. 30. Fair trade/community trade <ul><li>an organized social movement and market-based approach to empower developing country producers and promote sustainability </li></ul><ul><li>advocates the payment of a fair price as well as social and environmental standards in areas related to the production of a wide variety of goods </li></ul>
  24. 31. Fair trade/community trade <ul><li>focuses in particular on exports from developing countries to developed countries, most notably handicrafts, coffee, cocoa, sugar, tea, bananas, honey, cotton, wine, etc </li></ul>
  25. 32. Biopiracy <ul><li>A negative term for the appropriation, generally by means of patents, of legal rights over indigenous knowledge - particularly indigenous biomedical knowledge - without compensation to the indigenous groups who originally developed such knowledge </li></ul>