Ch 7 Flashcards
What are business ethics?
What constitutes right or wrong behavior and he application of moral principles in a business context
What is ethics?
Moral principles and values applied to social behavior
How moral principles are applied to ones life
What contributed to the 2008 recession?
Ethical problems by many US financial institutions
What is the moral minimum?
Minimum degree of ethical behavior expected of a business firm, usually defined as compliance with law
Just because something is legal doesn’t mean it’s ethical
What is often the goal of a company?
Profit maximization
How may a company adhesive short run profit maximization?
May continue to sell a profit even if it is defective
Over emphasis is the most common reason ethical problems occur
What happens when a company is attempting to achieve long run profit maximization?
Company’s tend to avoid things that could cause had publicity and law suits thoroughgoing unethical behavior
What is a company’s best bet to deadline its ethics?
When not sure how a law applies, a company’s best defense to allocations of misconduct is to show that the firm acted honestly and responsibly under the circumstances
What is one of the best ways to create an ethical workplace?
To have top managers who demonstrate its commitment to ethical decision making
Do not set goals unrealistically high
What does a code of conduct do?
States a company’s ethical priorities and demonstrates the company’s commitment to ethical behavior
How is an ethical code effective?
By being clearly communicated it its employees
Large firms have ethics training programs
Small firms offer some form of ethic training
What is the Sarbanes-Oxley Act?
Help reduce corporate fraud and eu thick decisions
Confidential systems so employees can raise red flags about suspected illegal or unethical auditing and accounting practices
What is a stock buyback?
The purchase of shares of a company’s own stock by that company on an open market
This cause price to be boosted
Who benefits from stock buybacks?
Corporate executives with stock options
Which enables them to buy shares of corporation’s stock at a set price
Technically legal but can be abused if used just to increase stock prices in the short term, without considering long term needs of the company
What was the problem with the American International Group?
Insurance company, lost millions of dollars from attempting create financial contracts, sought bailout but executives went to 400,000 dolla retreat
What was done about executive bonuses?
A provision was added to the American Recovery and Reinvestment tax act to restrict what bonuses could be given after receiving bailout funds
What is ethical reasoning?
A reasoning process in which an individual links his or her moral convictions or ethical standards to the particular situation at hand
Duty based and outcome based
What are religious ethical standards?
Christian tradition, based off of 10 commandments
These are typically absolute
What are kantian ethics?
Ethics derived from philosophical reasoning
Kant- a persons thoughts and actions should be respected
Categorical imperative
What is categorical imperative?
Ethical guideline developed by Kant that an action is evaluated by what would happen if everyone else in the same situation acted the same way
what are the principles of rights?
Human beings have basic rights
Whether an action is ethical depends on how it affects the rights of various groups.
Natural law embraces this
What is a potential problem with the principle of rights?
People’s rights sometimes conflict
Whoever right is stronger takes precedent
What is utilitarianism?
Greatest good for the greatest number of people
Action evaluated in terms of who it will affect
What is required in a utilitarianism approach?
Determination of individuals affected by an action
Cost-benefit analysis
Choice among alternative actions that will produce maximum social utility
