Legal Environment of Business

Legal Environment of Business - Legal Environment of...

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Legal Environment of Business Ethics – can be defined as the study of what constitutes right or wrong behavior. Business Ethics – focuses on what is right or wrong behavior in the business world. Moral Minimum – the minimum acceptable standard for for ethical business behavior. The moral minimum for ethical behavior in business is to comply with existing law, but simple complying with existing law does not necessarily fulfill all business ethical obligations. Fiduciary Duties – obligations owed to your company & to your investors and clients. Methods to Create Ethical Work Environment: 1. Draft Code of Ethical Conduct 2. Provide Ethical Training 3. Can Institute or Begin Ethical Compliance Programs (Rules of Corporate Governance) (Sarbanes-Oxley Act) Two Approaches to Ethical Reasoning: 1. Duty Based A. Focuses on the morality of the decision. B. Religious (10 Commandments) or Philosophical Belief Basis 2. Outcome Based (Utilitarian Approach) A. Focuses on the consequences of each business decision. B. Uses a COST-BENEFIT ANALYSIS to weigh the positive impact on everyone.
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C. Greatest Good for the Greatest Number. Enron Mark to Market Accounting – Recording future profits on the day the contract I s executed. Prediction, Manipulation, ant the Unknown Pump & Dump – Executive drives up prices stock and then would sell stock at higher prices <Pressure Analyst vs. Investment Bankers *Ethical handling of portfolios* Bad Reviews> Structured Finance – Sailing loses to FIGURATIVE COMPANIES (Faston) Federal Energy Regulatory Commission = FERC Whistleblower (Sharon) – reports unlawful or potentilally unlawful behavior to a higher power. Stock Collapsing Ken Lay cashes in $26 million in Enron stock (legit transaction) The employees couldn’t sale theirs. < Frozen Stock prices = $30, $90+, $36, $14, $.40- Chapter 1 Intro to Law and Legal Reasoning Important Functions of Law: 1. Stability 2. Predictability 3. Continuity
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Law – consists of enforceable rules governing relationships between: 1. Individuals (private parties), Companies ( non-gov. entities) CIVIL LAW 2. An Individual AND the Government CRIMINAL LAW ** A single act or action can involve both criminal and civil law (ex. Battery) Example A hits B. A. Civil – B can sue A to recover damages B. Criminal – Gov can sue A criminally to punish A for his actions. School of Jurisprudential Thought Jurisprudence – learning about different schools of Jurisprudential thought and discovering how the approaches to law characteristics of each school can affect judicial decision making.
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This note was uploaded on 10/17/2009 for the course ALL 0001 taught by Professor All during the Spring '09 term at University of Central Oklahoma.

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Legal Environment of Business - Legal Environment of...

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