business Ethics & Financial Management homework assessments

BBA 4751, Business Ethics 1

UNIT V STUDY GUIDE

Personal and Professional Ethical

Decision Making

Course Learning Outcomes for Unit V Upon completion of this unit, students should be able to:

1. Describe a process for ethically responsible decision making and explain the reasons why “good” people might engage in unethical behavior.

2. Explore the impact of managerial roles on the nature of our decision making.

3. Explain the role of accountants and other professionals as “gatekeepers.”

4. Outline the requirements of the Sarbanes-Oxley Act. 5. Define the “control environment” and the means by which ethics and

culture can impact that environment. 6. Discuss the legal and ethical obligations of a member of a board of

directors. 7. Describe conflicts of interest in financial markets and those in

governance created by excessive executive compensation. 8. Define insider trading and evaluate its potential for unethical behavior.

Unit Lesson This unit encompasses two chapters in our textbook both of which pertain to ethical decision making in the workplace. The first of the two, Chapter 2, explores areas of consideration for ethical decision making as an individual person and in a professional context. In making ethical decisions, there are a number of factors to consider including the facts of the situation, the ethical issues (if any), the affected stakeholders (and the situation from their point of view), as well as the consideration of available alternatives (a.k.a. “moral imagination”) and assessing the potential effects of any decision on stakeholders. After making a decision, the effects of the decision should be monitored and assessed for possible “course correction” and as a basis for future decision making. Perhaps the most difficult of these steps is recognizing that there is an ethical issue. This is made more complicated by the fact that people disagree on what is ethical versus unethical. The guiding principle in such situations is the degree to which a decision affects the well-being of the people involved. It is important to recognize that businesses, economic decisions, and/or ethical decisions are not mutually exclusive. There are many cognitive aspects that may inhibit this realization. The concept of normative myopia is the inability to recognize ethical issues. Inattentional blindness is the result of focusing on one aspect of a situation without consideration for all other factors. Change blindness refers to a dynamic where ethical issues change over time and therefore go undetected.

Reading Assignment Chapter 2: Ethical Decision Making: Personal and Professional Contexts, pp. 45-64 Chapter 10: Ethical Decision Making: Corporate Governance, Accounting, and Finance, pp. 523-553

Suggested Reading See information below.

BBA 4751, Business Ethics 2

Assuming an ethical situation is identified, it is best to consider how all parties would view the situation. This will ensure an equitable assessment and a balanced decision. In order to engage in this kind of assessment, one must possess moral imagination, which entails the ability to consider options beyond those that are obvious and to develop alternatives that mitigate, minimize, or compensate for any possible harmful consequences and/or to increase and promote beneficial consequences. The inability to engage in moral imagination is sometimes referred to as a cognitive barrier or stumbling block. When a decision is made that merely satisfies the moral minimum, it is known as “satisficing.” It is clear from research that the social environment in business plays a significant role in determining the ability and the willingness to identify and act upon ethical issues. Managers have a particularly important role in creating a culture that promotes ethical decision making. The second chapter for this unit’s study is Chapter 10. The chapter introduces a range of issues including corporate governance, accounting, and finance. In that context, one of the most infamous examples of recent lapses in professional duties and conflicts of interest is that of the Enron Corporation, which led to the demise of both Enron and their auditing firm, Arthur Andersen. Whether one is a free-market advocate or one that favors increased government regulation, these acts of fraud and deception have severely harmed stakeholders and have shaken confidence in the markets. One reaction to these events has been to highlight the functions of important “gatekeeping” roles such as attorneys, auditors, accountants, and financial analysts. Their role is to ensure that those who enter into the marketplace are playing by the rules, which will assist the market in running smoothly. For the sake of clarity, it should be noted that a conflict of interest exists where a person holds a position of trust but allows his or her own interests to interfere with the decisions making process. A leadership role requires one to fulfil the respective fiduciary responsibilities (a professional and ethical obligation to duties that overrides any personal interests). Another reaction has been tightened regulation in the form of the Public Accounting Reform and Investor Protection Act of 2002, which is commonly known as the Sarbanes-Oxley Act or SOX. SOX applies to over 15,000 publicly held companies in the U.S. and is intended to provide oversight in terms of direct lines of accountability and responsibility. However, since one cannot predict each and every lapse of judgment, no regulatory or legal fix is able to guarantee compliance certainty; this is where ethics comes into play.

Reference Hartman, L. P., DesJardins, J., & MacDonald, C. (2014). Business ethics:

Decision making for personal integrity & social responsibility (3rd ed.). New York, NY: McGraw-Hill.

BBA 4751, Business Ethics 3

Suggested Reading Click here to access the PDF of the Chapter 2 Presentation. Click here to access the PDF of the Chapter 10 Presentation. Berkowitz, A. D., Johnson, II, T. K., Downes, J. I., Eisenstadt, L. F., &

Rubin, J. W. (2010, Winter). The Supreme Court and its recent employment-related rulings. Employee Relations Law Journal, 36(3), 90- 94.

Galloway, A. (2011, December). A "narrow exception" run amok: How courts

have misconstrued employee-rights laws' exclusion of "policymaking" appointees, and a proposed framework for getting back on track. Washington Law Review, 86(4), 875-903.

Ward, S. F. (2012, February). The badgering state: As Wisconsin battled over

state workers' rights, its supreme court justices also skirmised - with a choke hold and a sheriff's probe. ABA Journal, 98(2), 42+.