Notes
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 Ethics
 Managers are expected to behave in an ethical manner.
 The province of ethics is to sort out what is good and bad.
 But, what is the criterion or guideline for doing so?
 Philosophers came up with some criteria, but none of them makes sorting out what is good and bad an easy task.
 Here, we introduce two of these criteria.
 Principle 1
 Golden rule: Do unto others as you would have others do unto you.
 But the next example, the so-called Sopranoism, shows the limitation of this principle: Whack the next guy with the same respect you’d like to be whacked with, you know? (Source: Cathcart and Klein, 2007).
 Principle II
 Confucianism: Do not do to others what you do not want done to yourself.
 This is a rather robust criterion.
 But its limitation is that it says nothing about what you should do.
 Dilemma
 Ethical decisions often yield a dilemma.
 Suppose that you were the CEO of investment bank XYZ in 2005. The debt/equity ratio of the bank was 20. All of your competitors raised their debt/equity ratios to 30 to please the stock market so that their stock prices could be higher than otherwise would be. You knew that raising the debt/equity ratio to 30 was rather risky and could destroy the bank if business went wrong. But you knew the investors would be disappointed by the otherwise lower share price if you did not raise the debt/equity ratio.
 So, what is the answer?
 I do not have an answer for this kind of ethical question because it is a dilemma; otherwise, I would not use the word “dilemma.”
 All I know is that you, as professional managers, are expected to behave ethically.
 One thing I know for sure is that never do anything that will put you in a prison cell; you are too cute for a prison cell.
• The Corporate Financial Manager’s Goals
• Maximize profit?
– Earnings reflect past performance,