Chapter 2 - Manter 1 Chapter 2 Chapter 2 Business Ethics...

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Manter 1 Chapter 2 Chapter 2 – Business Ethics and Social Responsibility Sarbanes-Oxley Act – federal legislation designed to deter and punish corporate and accounting fraud and corruption and protect the interests of workers and shareholders through enhanced financial disclosures, imposing criminal penalties on CEOs and CFOs who defraud investors, protecting whistleblowers, and establishing a new regulatory body for public accounting firms. Business Ethics – standards of business conduct and moral values. Constituencies to Which Business are Responsible Customers Employees Investors Society Stages of Moral and Ethical Development: Stage I – Preconventional o Individual is mainly looking out for his or her own interests. Rules are followed only out of fear of punishment or hope of reward. Stage II – Conventional o Individual considers the interests and expectations of others in making decisions. Rules are followed because it is a part of belonging to the group. Stage III – Postconventional o Individual follows personal principles for resolving ethical dilemmas. He or she considers personal, group, and societal interests. Common Business Ethical Challenges Conflict of Interest Honesty and Integrity Whistleblowing Loyalty versus Truth Conflict of Interest – situation in which a business decision may be influenced by the potential for personal gain. Integrity – adhering to deeply felt ethical principles in business situations. Whistleblowing – employee’s disclosure to government authorities or the media of illegal, immoral, or unethical practices committed by an organization. Structure of an Ethical Environment Awareness Reasoning Action Leadership
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Manter 2 Chapter 2 Code of Conduct – formal statement that defines how the organization expects and requires employees to resolve ethical issues. Social Responsibility – management’s acceptance of the obligation to consider profit, consumer satisfaction, and societal well-being of equal value in evaluating the firm’s performance. Social Audit – formal procedure that identifies and evaluates all company activities that relate to social issues such as conservation, employment practices, environmental protection, and philanthropy.
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