...Ethics Student Name MGT/498 Due Date Instructor Ethics A business must operate with ethics as a guiding principle to be successful and profitable. A company that is publically traded bears a responsibility of being a good steward of the profits the company earns, for the stakeholders, employees, and clients. The social aspect of a company and ethics go hand-in-hand. If a business fails to act ethically responsible, the result of that behavior can affect it socially. “The concept of social responsibility proposes that a private corporation has responsibilities to society that extend beyond making a profit” (Wheelen & Hunger, 2010, pg. 72). When a company is established, it begins with a foundation constructed from an idea. The idea evolves and must blossom for the business to grow and make a profit. When a business attains the soliciting stakeholders phase, there must be strategic plan in place. An effective strategic plan requires that a model is developed in order for the business to operate. Running a business requires the owner to have a plan that will include the mission, vision, code of conduct, and ethics that it will go by. A code of conduct and ethics is what the organization expects from the employees. It should also have a written policy of what the consequences are for violating any of the policies. Code of Ethics “A code of ethics specifies how an organization expects its employees to behave while on the job” (Wheelen & Hunger, 2010, pg...
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...Business ethics are a pivotal aspect in strategic business finance, or finance in general. Poor ethical practices and immoral acts have been conducted across many years by many individuals and businesses in the business world in regards to finance. This paper will focus on two of the more well-known ethical issues that occurred in the late 1990s and early 2000s, Enron Corporation and WorldCom. This paper will focus on the factors that led to the demise of the corporations, as well as the violations that occurred within the accounting practices, and the specific ethical violations in strategic financial planning. To summarize, the largest contributing factor to the demise of Enron Corporation and WorldCom was simply corporate governance failure (Stanford GSB Staff, 2016). The smaller factors that led to the governance failure were such things as increases in executive compensation and stock options, jumps to incentives to manage earnings, and major shifts in the structure of auditing firms. These changes directly led to the loss of money and public confidence. These reason can be classified as nothing other than management greed. This can be validated by the statistical increases in worker compensation which rose forty-two percent in the 1990s as well as corporate profits rose eighty-eight percent, the standard and poor index increased two hundred and forty-eight percent, as well as CEO compensation rose four hundred and sixty-three percent during this timeframe (Stanford GSB...
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...Ethics Paper Any business that expects to not only turn a profit but have longevity in the market has to operate ethically. A publically traded company has more than the bottom line of earning money, but a responsibility to be a good steward of those profits for their employees, stakeholders and clients. Along with ethics is the social aspect of business which go hand and hand if a business doesn’t act ethically responsible then the social ramifications will be poor as well. When a company forms it is a foundation built from an idea a person has and transforms into a business and if that idea blossoms then the business grows. When a business reaches a stage of soliciting stakeholders a strategic plan needs to be in place, part of that plan is developing a model for the business to operate under. Part of running a business is having a plan that will incorporate what the company’s mission, vision and code of conduct as well as ethics is. That code of ethics and conduct is what the company expects from their employees and what a company will do if those policies are violated (McNamara). A code of ethics is a guideline of expectations and the values the company holds important. When a company has employees that question if something is wrong or not then the code of ethics can be a useful guide but doubles as an orientation tool to show employees what the repercussions are of violating those rules. In today’s failing economy it is obvious to see the repercussions of unethical...
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...American Business Ethics a Modern Day Oxymoron The dictionary defines an oxymoron as a figure of speech that combines contradictory terms. Examples of this are dark light or living dead. This term is related with business because although most companies have a small book outlining ethics and guidelines that should be followed on a daily basis, many of them do not fully comply. The oxymoron “American Business Ethics” contradicts American Business with Ethics. The ethics of many American companies are not law but should be treated as such however these regulations are rarely followed and sometimes not followed at all. The risks that companies have been taking to increase profits and put more money into the CEO’s pockets use illegal actions. In recent times, companies such as Enron, Wal-Mart and BP have been guilty of multiple charges against ethical principles which have led to bankruptcies, housing market crashes and environmental disasters. The most famous case related to Enron and their aggressive accounting practices of reporting losses as profits to keep the stock price high. This act ultimately led to the bankruptcy of the company. Enron was founded in Omaha, Nebraska by Kenneth Lay in 1985. It was an American energy, commodities and services company based in Houston, Texas. Enron was once viewed as one of the best companies in America during its initial years of operation. Fortune magazine named Enron “America’s Most Innovative Company” for six consecutive years...
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...1. What were the business risks Enron faced, and how did those risks increase the likelihood of material misstatements in Enron's financial statements? When Enron diversified beyond its pipeline business to become a trader in natural gas its business risks increased. It could make a loss. Further, it became a financial trader and a market maker in electric power, coal, steel, water and broadband fiber optic cable capacity, and paper and pulp. Each of these diversifications brought with it a risk that the business would not be successful. Most importantly, Enron undertook international projects relating to construction and management of energy capacity. This increased it business risk several fold. There was a strong possibility that Enron would not have cash to meet its operational needs. Consider this, Enron had to operate gas pipelines, pulp and paper plants, broadband facilities, international water plants and electricity generating plants. Furthermore, it was trading on the international financial markets for these products or securities. The risks that it would not have the cash flow to finance these operations increased. 2. What are the responsibilities of a company's board of directors? Could the board of directors at Enron-especially the audit committee-have prevented the fall of Enron? Should they have known about the risks and apparent lack of independence with SPE's? What should they have done about it? Enron's Board had the responsibility to appointing...
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...Ethics A business that expects to turn a profit and have sustainability in the market must operate ethically. A company that trades publically has the responsibility of handling the profits of the company for the clients, stakeholders, and employees. The company also has the responsibility of earning money for the clients, stakeholders, and employees. Ethics is the social aspect of business, when a business does not act ethically responsible there are ramifications socially for the company also. A company forms its foundation from the idea of a person and transforms it into a business, and when that idea blossoms the business grows. A business eventually reaches the stage of needing to solicit stakeholders and the company needs to put a strategic plan in place. The company must develop a model the business will operate under. An integral part of running a successful business is implementing a plan that incorporates the company’s vision, code of conduct, and mission as well as a code of ethics. The code of ethics and conduct is the expectation the company has for its employees and the consequences for violating them (McNamara, n.d.). The code of ethics a company implements is a guideline of the expectations for employees and the values the company holds is extremely important. When an employee questions what is right or wrong within the company, the code of ethics and values are a useful guide to answer the employees’ questions. The code of ethics and values also can be used...
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...Business Ethics and Corporate Responsibility Professor Dr. Dana Legette-Traylor Unit 5 Case Study Accounting for Enron By Accounting for Enron 1. Donald Duncan had responsibilities to everyone mentioned and he definitely failed by acting negligently and by showing a complete lack of ethics throughout his involvement with Enron. Due to the fact that Donald Duncan was the head auditor he had a responsibility to maintain the highest professional accounting and auditing ethics, and to lead his team morally as possible. When people are seeking wealth without thinking about who they hurt in the process they will continue to cheat and wait until there is no going back to correct the issue. Auditors were taught to maintain ethics and to be as unbiased as possible and to be very aware that fraud can present its self at any time. Duncan should have made sure that he provided the shareholders with a detail audit report that is accurate to ensure them that everything is okay or if something is needs attention. But Duncan in this case was deceiving the shareholders because his boss instructed him to do so for a very large amount of payment. When Duncan got rid of the documents he incriminated himself right away because he was trying to hide the evidence that he played a part in the scandal. 2. There is nothing wrong with aggressive tactics when it comes to accounting because companies can lose when this practice is unethical. A person can be as aggressive as possible so as...
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...There was a vast number of ethical issues raised in the movie “Enron-the Smartest Guys in the Room” but the four I am going to focus on are listed below. Art Anderson, Ken Lay and all of the other executives did a number of unethical things which ultimately brought down Enron and affected thousands of employees and their futures. The bottom line was that each and every one of them acted out of greed for the almighty dollar. 1- Encouraging employees to invest and buy stock in Enron when they knew the truth about the lack of value in the stock. As an employee you trust in your management to make the best choices both for you and for the business to succeed. Ken Lay and other executives strongly encouraged Enron employees to invest in it’s stock. They all knew that the company was not doing well and yet they encouraged others to spend their hard earned money investing in it all the while they are selling their shares of stock. Employees trusted and relied on their decisions and in the end it ended up hurting them. With Ken Lay publicly encouraging its employees and other investors to invest in Enron’s stock he is affecting their future and retirement. These employees didn’t earn nearly as much as he did and he is convincing them to invest their money into an entity that was set to fail by Lay himself. I don’t believe any proper ethical alternative action could have been taken in this situation. Of course you want your employees to have faith in the company they work for...
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...them in either category, and how the theories translate into the real world. Some examples of questions raised are as follows: What it means to be ethical and unethical, how can one distinguish between the two, and do people like this exist in the real world. Based on the research and the answers a guideline is set to define the difference between the two types of leaders. Introduction There is no question that many companies have prompted to carry out the ethics issues, and they are also making a set of the organizational cultures. In the mean time, some companies, which have further view, are also providing ethics training to managers. Nowadays, business always needs to pay attention to ethics and leadership, and its ethics is not only established in the United State but also around the world. Since the ethics issues are getting more important, as a leader, should be held to higher level of morality and ethics. However, the leaders play an important role in promoting ethical conduct in their business, and the ethics continually challenged by new...
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...Ethical Breaches ACC 557 Name Date Instructor Introduction In recent years, accounting ethical breaches has emerged as a major problem for most of the organizations. With growth of businesses, the number of accounting ethical breaches has also increased in organizations. Accounting ethical breaches may be defined as the misappropriation and misconduct of financial data by the auditors and accountants of the company (Duska & Ragatz, 2011). The accounting ethical breaches not only affect the organization, but also the stakeholders involved with the organization. The paper will discuss the accounting ethical breach in Enron. The paper will also discuss the ethical issues, accounting ethical breaches and the recommendations to prevent such breaches. Ethical Behavior in Current Business and Regulatory Environment With increasing number of corporate ethical breaches, the role of ethical behavior has increased in organizations. The organizations are more supportive to ethical behavior ensuring risk, compliance and governance culture within organization. As a part of this culture, effective communication around ethical practices has been followed by the organization. Since ethical breaches are mainly done for the sake of money, rewarding and ethical practices has effectively helped organizations to minimize the ethical breaches (Ferrell & Fraedrich, 2009). At the same time, ethical breaches have not only affected the image of the company, but are also responsible for...
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...ENRON AND UNETHICAL BEHAVIOR By SHERNITA JONES INSTRUCTOR ALFRED GREENFIELD ACC 557 FINANCIAL ACCOUNTING 10/27/2013 This paper will describe the following: 1) Corporate ethical breaches in recent times, assess whether or not one believe that current business and regulatory environment is more conducive to ethical behavior. 2) Describe the organization, the accounting ethical breach and the impact to the organization related to ethical breach. 3) Determine how the organization ethical issue was detected and how management failed to an ethical environment. 4) Analyze the accounts impacted and / or accounting guidelines violated and the resulting impact to the business operation. 5) As CFO, recommend which measures could have been taken to prevent this ethical breach and how each measure should be implemented in the future. Establishing principles for ethical behavior frequently starts with a policy on ethics. Businesses acquire a policy on ethics to guide their measures and to set up a general meaning of correct versus incorrect. According to the American Library Association, code of ethics is a handbook for suitable behavior (2012). Given the corporate ethical breaches in recent times, existing businesses and regulatory environment is more conductive behavior because some companies and managers feel as though they can get away with it. The unpredictable increase and collapse of the Enron Company set off a...
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...Business ethics is the principles and standards that determine acceptable conduct in business organizations. If there was any doubt that ethical standards can have a significant impact on work life, research has confirmed that such doubt is unwarranted. A multitude of research has demonstrated that ethics is related to a variety of important job related outcomes. For example, studies have shown that a higher ethical work climate (Mulki, Jaramillo, and Locander, 2008) and top leadership support for ethics and both positively relate to job satisfaction. Ethics codes (Valentine and Fisherman, 2008), ethics training, and perceived corporate social responsibility are also linked to job satisfaction. Unethical business research at work ranges from minor acts of deviance to immoral decisions that result in catastrophes such as the Enron and Merrill Lynch & Co Inc. These fields of research provide especially clear data on connection between unethical workplace acts and wellbeing: discrimination, bullying and injustice. Even though ethics is sometimes under looked in business it is an important conduct in the organization for a variety of reasons. Organizations have to ensure that they practice high standards of ethics in the organization to rip maximum benefits and avoid scandals such as the Enron And Merrill Lynch & Co Inc. Enron Corporation and Merrill Lynch & Co Inc, both practiced unethical business behavior, this is because two of their top officials were involved in fraudulent...
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...Oxley Act and the Enron scandal was about the fraudulent issues that took place within one of the top American oil refinery companies. The article discussed the overall background of Enron success as well as Enron’s major fall due to the dishonest business ethics that took place within the company. The article explains the Sarbanes- Oxley act that passed in 2002 and why the act came about and the importance of the Sarbanes- Oxley act to the corporate business world. LEGAL ISSUE In the article there were many legal business issues that arise within the company Enron. Most of the legal issues that were mostly common in Enron were fraud. Enron were very misleading to their shareholders and employees and were being dishonest about their earnings reports while telling their employees to invest only in Enron as well as the embezzlement of money from the firm. The end result of Enron’s legal issues lead to their bankruptcy and furthermore the Sarbanes –Oxley act that took place to ensure less fraudulent activities within corporate companies. MANAGERIAL PERSPECTIVE The legal issues affect business tremendously; it can cause the business to lose almost everything because of the unethical way business is being conducted. In the Enron scandal many issues could have been avoided by simply being honest with their earnings reports as well as remaining ethical by not trying too hard to get ahead and compromising their corporate image. If Enron would have not compromised...
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...Ethics Paper MGT/498 Ethics Paper Any business that expects to not only turn a profit but have longevity in the market has to operate ethically. A publically traded company has more than the bottom line of earning money, but a responsibility to be a good steward of those profits for their employees, stakeholders and clients. Along with ethics is the social aspect of business which go hand and hand if a business doesn’t act ethically responsible then the social ramifications will be poor as well. When a company forms it is a foundation built from an idea a person has and transforms into a business and if that idea blossoms then the business grows. When a business reaches a stage of soliciting stakeholders a strategic plan needs to be in place, part of that plan is developing a model for the business to operate under. Part of running a business is having a plan that will incorporate what the company’s mission, vision and code of conduct as well as ethics is. That code of ethics and conduct is what the company expects from their employees and what a company will do if those policies are violated (McNamara). A code of ethics is a guideline of expectations and the values the company holds important. When a company has employees that question if something is wrong or not then the code of ethics can be a useful guide but doubles as an orientation tool to show employees what the repercussions are of violating those rules. In today’s failing economy it is obvious...
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...Ethics Ethics in a corporation is a matter of following the rules and conditions of the company sponsoring one for employment or doing business with different corporations. The corporations have to keep in mind that any actions or decisions they may take if for the worst to the better it will affect the company as a whole, the stakeholders, and the employees whom it involves along with other businesses that are associated with the corporation. It is mainly the social responsibility of the corporations to make such decisive actions toward the company. Ethics and Social Responsibility in Strategic Planning Ethics and social responsibility are similarities to one another in different scenarios when having or developing a strategic plan. When a corporation goes through various decisions that have to make an action toward a situation, it needs a strategic plan because it does affect the employees, the corporations as a whole and the corporation’s stakeholders. When deciding about strategic social responsibilities it “means going beyond the letter of the law to truly accomplish good in the world and reduce the negative impacts of doing business”(Ingram 2012). Ethics of course takes the big understood as the rights of doing something accordingly that will be beneficial for the whole. According to Aminah Abdullah: “Ethics refer to the fundamental principles of an individual or a group. Social responsibility is how a business...
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