RSM100Y1 Lecture Notes - Marriage Vows, Insider Trading, Federal Accountability Act

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4 Apr 2012
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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
recycling
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Responsibility 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
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