Chapter 2
Ethics And The Law
Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
McGraw-Hill/Irwin

Accounting fraud
 Sarbanes-Oxley
• Places a greater onus on upper management to monitor the financial dealings of their firms
Environmental pollution
Technology
 Stem cell
 Cloning
Global business
 Cultural differences
Essentials of Business Law Chapter 2-2

Ethics
 Philosophical approach to right and wrong
Morals
 Behaviors judged by society
Values
 Standards considered worthwhile
Essentials of Business Law Chapter 2-3

Sources Of
Group And Individual Values
Religions
Traditions
Customs
Culture
 Values of a nation or ethnic group
Subculture
 Values within a corporation or department
Essentials of Business Law Chapter 2-4

Relationship Between
Law And Ethics
Government
 Impose legal mandates
 Precise
Ethics
 Multifaceted
 Form foundation of many legislative decisions
Essentials of Business Law Chapter 2-5

Business firms
 Corporate responsibility
• Donate equipment and personnel to local school
• Construct a park
 Code of ethics
• Principles of behavior for personnel in various situations
Essentials of Business Law Chapter 2-6

Honesty
Adherence to the law
Product safety and quality
Worker health and safety
Conflicts of interest
Employment practices
Marketing practices
Financial reporting
Supplier relationships
Pricing, billing, and contracting
Trading in securities
Payments to obtain business
Essentials of Business Law Chapter 2-7

Educational institutions
 Courses
 Workshops
 Programs
Trade and professional associations
 Create guidelines
Essentials of Business Law Chapter 2-8

Government
 Federal Sentencing Guidelines
• Hold companies to higher standards
 U.S. Office of Government Ethics
• Conflicting financial interests
• Misuse of position
• Financial disclosure
• Impartiality in performing official duties
 Foreign Corrupt Practices Act
• Prohibits American firms from bribing foreign officials
Essentials of Business Law Chapter 2-9

Whistleblowing
 Revealing illegal or unethical behavior
 Often causes ethical dilemma
Integrating ethics into business and government
 Watchdog groups
Essentials of Business Law Chapter 2-10