Stake.int.Soc.Res.Chapter.2 - Chapter 2 Ethical Theory and...

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Chapter 2 Ethical Theory and Business
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Learning Objectives Understanding basic categories and concepts of ethical theory Identify the error of ethical relativism Explain ethical theory of utilitarianism Explain how utilitarian ethics provides support for market economics and business policy
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Learning Objectives Clarify several major challenges to utilitarian ethics Explain the rights-and-duty based ethics of deontology Explain the basic concepts of virtue ethics
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D iscussion Case – AIG Bonuses and Discussion Caps after Bailout Discussion Case: Salary Caps = public outcry Facts: bailout amount -$180 billion; bonuses $165,000,000 Defense of Bonus Contract Needed for incentives to keep top executives Commitment to pay made before Bailout
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Critics of AIG BONUSES AND EXECUTIVE SALARY CAPS Example: corporate greed Contractual obligation should have been overridden and renegotiated Talented execs problem in first place Liddy Obama administration – took steps Gethner – compensation packages were part of economic crisis
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Critics History of executive compensation (Forbes article) = highway robbery From 1960 to present: ratio of corporate (after tax) pay for executives v. factory worker increased dramatically Biden
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Critics Obama Cap – any borrower of federal funds Required to put a $500,000 cap on executive bonuses End of 2009, several banks paid off loan and were not subject to tax
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Discussion Questions Maximum Wage Law Standards for a fair wage Salary tied to results Large Salary v. Incentive or Rewards “Make too much money for their own good”
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2.1 Introduction Language of ethics – is a part of business as is the language of economics Goal of this section: philosophical theories are not too theoretical but have everyday applications Ethics Theory (Definition): Systematic answers to fundamental questi ons
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Ethics Definitions Rational Justification as to why we act Example: 3 arguments in support of AIG bonuses Consequence of paying v. not paying Principles of breaking a contract Personal Character Need ethics as tool for judging the correctness of our actions How should I live my life? Question for
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First two Categories of modern tradition of ethical thinking 1. Utilitarianism – overall consequences of our act Example: justification of executive bonuses 2. Deontological- based on moral principles Example: keeping promises - used to justify AIG bonuses – four arguments Contract signed - matter of principle Promise made Payment is a matter of principle
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Third Category of modern tradition of Ethical Thinking: Virtue Ethics 3. Virtue Ethics- moral character (character traits); reasoning Virtues: character traits that lead to a fulfilling life Lack of virtue – basis for characterizing executive compensation as greedy, etc. – not leading a fulfilling life (Philosophical Perspective- Challenge to Relativism: all ethical judgments are relative to the person or culture that
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This note was uploaded on 02/27/2012 for the course FINANCE 101 taught by Professor Yuy during the Spring '12 term at Centenary College New Jersey.

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Stake.int.Soc.Res.Chapter.2 - Chapter 2 Ethical Theory and...

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