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Rotman Commerce (1,103)
RSM100Y1 (287)
John Oesch (141)

Lecture 3

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Rotman Commerce
John Oesch

RSM100Y1 Lecture 3 Role of Ethics in Business 20110928Agenda for today 1Highlights from last week 2Intro to the role of ethics in business 3Examples Case Study Queens University Facts Queens received a 1M gift from David Radler to help finance their new business school After the school is built they erect a plaque commemorating the contributioncreate the David Radler Wing Approx 2 years later Radler pleads guilty to criminal charges involving securities fraud and is sentenced to jail and fined Hollinger case Queens Board of Trustees decides to return the money and remove the plaque from the building Extra Class NotesDavid Radler Conrad Blacks Right hand Man Imprisoned for FraudTestify against Conrad BlackReturned 1M Never test on case facts only knowledge of ideas and etcQuestions Was this the right decision Where are they going to get the money Were there alternatives What if it was a hospital What if it was 50M What would you do By making rules code of ethics as explicit outside of you as can be it is easier to follow and act by the guidelines set upClassroom donated by business fraud wrongful and unappealing to prospective students Blacks Family Conrad Blacks Father donated 50M to Sick Kids Hospital they did not return it because it was before the fraud of Conrad and they believed his father the funds remainedDefinitionEthics the discipline dealing with what is good and bad with moral duty and obligationA a set of moral principles or valuesB theory of system of moral values the presentday materialistic ethicC plural but singular or plural in construction the principles of conduct governing an individual or a group professional ethicsD a guiding philosophySlide WHY STUDY ETHICS2025 years ago ethics wasnt as explored as now businesses were conducting daily fraudsBreXGold Fraud Generated profit to increase by lyingBernie Pyramid SchemeFords cars tipping over known by senior management but they figured it is cheaper to fight off suitcases than to recall all the cars1970 Pinto gas tank killed approx 30 peopleWhats Happened Environmental concerns Moral sensitivity fairness Poor judgment training ethics Stakeholder activism Economic pressure to survive slippery slope Scandals whistleblowers Stakeholder activismtransparency accountability Governance initiatives Fiduciary Responsibility Increased Liability Since the incidents many have been concerned What Does a Corporation Do Produces goods and services Maximizes shareholder value Contributes to the betterment of society Provides jobs Pays taxes Supports social and environmental infrastructures Milton Friedman Nobel Prize winnerEconomics The social responsibility of business is to increase its profits Concentrate on what it does best The role of government is to be socially responsible through social policies Government has the tools to be SR Corporation should make purely profit nothing elseIf pretending means increase in profit corporation should Greenproducts greenwashingUp to the government or holder sell share to determine whether it fits their Social GuidelinesTaxation Without Representation According to Friedman companies should pay out their profits to SH SH can decide where they want to allocate their resources This results in taxation without accountability no corporate income tax
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