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LPP 255 (13)
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Chapter 5

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Law & Public Policy
LPP 255

Chapter 5 • Ethics= the study of what constitutes right or wrong behavior • Business ethics= right and wrong in the business world • Moral minimum= minimum acceptable standard for ethical business behavior o Follow the law, don’t get in trouble o “Gray areas”  Court decides what is “foreseeable” and “reasonable” o Short run profit maximization= increase profits by continuing to sell a product, even though it defective  Long run: profits suffer • Lawsuits, bad publicity, unethical conduct • Ethics training for employees • Sarbanes- OxleyAct= requires companies to set up confidential systems so that employees and others can raise red flags about unethical accounting practices • Stock buyback- corporation buys its own stocks to boost the price of their stock o Stock options= corporate executives can buy shares of the stock at a set price, they can profit by selling their shares o Executive bonuses • Ethical reasoning= reasoning process in which the individual examines the situation at hand in light of his or her moral convictions or ethical standards o Duty based ethics= derived from revealed truths, religious precepts or philosophical thoughts  Religious ethical standards  Kantian ethics • Categorical imperative= evaluate the actions in light of the consequences if everyone followed your action  Principle of rights= believe that the key factor in determining whether a business decision is ethical is how that decisi
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