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Rotman Commerce (1,103)
RSM100Y1 (287)
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Ethics.docx

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Department
Rotman Commerce
Course
RSM100Y1
Professor
John Kloppenbord
Semester
Winter

Description
Ethics A Corporation: •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 winner –Economics •“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) •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 A business’s collective code of ethics towards its stakeholders –its customers –its employees –its investors –its suppliers –its local community Responsibility Toward The Environment •Air pollution •Water pollution •Land pollution –toxic waste disposal –recyclingResponsibility Toward Customers •Rights of consumers –consumerism •Unfair pricing –Collusion (eg. Air Canada today) •Ethics in advertising –truth in advertising –advertising of counterfeit brands –morally objectionable advertising Rights of Consumers •Right to safe products •Right to be informed about all relevant aspects of a product •Right to be heard •Right to choose what they buy •Right to be educated about purchases •Right to courteous service Responsibility Toward Employees •Legal and social commitments •human resource management issues •social responsibility issues •privacy issues •drug testing and computer monitoring •encouraging ethical behaviour •whistle-blowers Responsibility Toward Investors •Improper financial management •ENRON –type fraud, auditor like Arthur Andersen, Lay (CEO dies of heart attack), Skilling in jail, Fastow testified against for wife’s lighter sentence Complex (Illegal) Transactions •SPE –Special Purpose Entity •Hedges•Derivatives •Swaps •Forward contracts •Pre-paid contracts •Wash Trading •Prepays •Tax Avoidance •Fake trading room •Whistleblowers •Fees to accountants, l
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