Thesis on "Ethical Issues in Business the Duty"

Thesis 6 pages (1748 words) Sources: 10 Style: APA

[EXCERPT] . . . .

Ethical Issues in Business

The Duty to Report Legal Violations:

There is no question as to whether one has an affirmative duty to report the situation if, and to whatever extent, one believes in good faith that the accounting practices are illegal. In fact, the belief that they violate statutory law specifically intended to regulate the industry makes this scenario considerably easier to analyze from an ethical perspective than a similar scenario but involving apparent ethical violations that you knew or believed were completely legal.

The illegal fraudulent manipulation of corporate balance sheets to misrepresent financial information and to conceal the truth from industry regulators violates multiple lines of ethical thought. General principles of utilitarianism would require that you report your belief for the benefit of stockholders, investors, and the general public; rule utilitarianism would require you to comply with the law (Rosenstand, 2008). In that

Respect, the fact that your position, by law, also includes specific fiduciary responsibilities (Halbert & Ingulli, 2007) also makes this situation much easier than similar circumstances where you are merely a passive observer.

Virtue ethics would also require that you reported what you believed provided only that your motivation were genuinely for the sake of justice. Virtue ethics would not be satisfied, for example, where your express purpose for reporting the situation were to undermine a despised boss or for selfish reasons like positive publicity, irrespective of whether or not reporting your beliefs also achieved a valid purpose if, and to whatever extent, that benefit is merely coincidental rather than part of your motivation

(Hursthouse, 1999).

Therefore, the main ethical variable is your relative degree of certainty that the practices you observed are indeed illegal. Nor must you necessarily be certain of their illegality for you to have a duty to report them. Rather, your duty exists anytime you believe there is a genuine probability in that regard. Furthermore, you likely have an affirmative duty to investigate any reasonable suspicions you have because both schools of utilitarian ethics and virtue ethics would prohibit the arbitrary (or convenient)

dismissal of reasonable grounds for suspicion once they arose (Mihaly, 2007).

Becoming a Whistleblower:

Where internal reporting failed to redress the problem satisfactorily, utilitarianism and virtue ethics would require you to become a whistleblower for many of the same reasons that generated the duty to report the situation in the first place. The benefit of stockholders and investors would give rise to a utilitarian duty to follow up; likewise, virtue ethics would require you to seek justice for its own sake (Hursthouse, 1999; Wiley,

1995).

Both ethical egoism and common sense would require you to take every possible precaution to protect your own interests in the process of fulfilling your ethical and legal duties to report the violations. Where action on your part could be delayed long enough to allow for the optimal protection of your position and your legal recourses in the event of retaliation, ethical egoism and common sense would suggest that you do so. However, to the extent the delay on your part necessary to best protect your interests could potentially reduce the value of the report or allow increased damage to others, general utilitarianism, virtue ethics and altruism would suggest that you file the report without delay and protect your interests as much as possible simultaneously.

Unintended Negative Consequences to Coworkers:

In principle, the type of unethical conduct at issue is potentially harmful to many more individuals and entities than the number of individuals exposed to harm directly because of your reporting the situation. Even in the worst case scenario, if dozens (or hundreds) of people at your firm (and at other firms or businesses) could lose their jobs by virtue of your decision to file a report or become a whistleblower, it is much more likely that the they would be vastly outnumbered by those who could potentially be harmed, (albeit perhaps less directly), by allowing the perpetuation of deliberate financial and accounting fraud.

Because the numbers of stockholders, investors, and members of the public who could be affected by the fraudulent practices, general utilitarianism would require you to do whatever benefits the most people (Rosenstand, 2008). Regardless of how many people might be affected either way, rule utilitarianism requires you to file a report, as would virtue ethics, provided (again) only that your motivation is to achieve justice. In that regard, rule utilitarianism and virtue ethics (if motivated by principles of truth and justice) would require reporting illegal conduct even where the numbers were completely reversed and more people were actually exposed to harm by reporting than by non-reporting (Rosenstand, 2008).

Therefore, the much more difficult question would arise where the conduct were merely unethical but perfectly legal and your reporting the ethical violations harmed more of your coworkers than the conduct itself. In such a case, general utilitarianism would require that you not report the violations, while rule utilitarianism would produce the opposite result, assuming only that common principles of business ethics constitute

"rules" (Mihaly, 2007; Rosenstand, 2008). Likewise, virtue ethics would also yield contradictory results depending on whether the motivational emphasis is on the desire to avoid hurting fellow employees -- in which case virtue ethics would prohibit filing a report -- or to follow the commonly accepted rules of business ethics -- in which case virtue ethics would require your filing the report (Hursthouse, 1999).

Unintended Negative Consequences to the Community:

In principle, the respective schools of ethical thought would produce identical results where the relative outcomes involve potential harm to the external community rather than potential harm to members of your firm and its various business partners, stockholders, investors, and clients. General utilitarianism would always require taking whichever course of conduct benefited the greatest number of people, while rule utilitarianism would always dictate following any laws and formal rules (including commonly accepted business ethics).

Meanwhile, virtue ethics would always require whichever course of conduct was motivated either by the desire to follow rules, the desire to achieve justice for the sake of justice, the desire to honor truth, or the specific desire to benefit others. Altruism would require risking your own interests to benefit others, while ethical egoism would emphasize your own interests first (Mihaly, 2007; Rosenstand, 2008). In situations

where the issues pitted potential harm to you against potential harm to others, all of those ethical theories (except ethical egoism) would consider the total amount of potential harm and require your acting to minimize harm as much as possible, even at your own expense.

Direct Parallels to Contemporary Events in Domestic Economic Issues:

In many respects, the current economic predicament in the United States is the result of very similar situations over the course of several decades in general and in the last few years in particular. To a certain extent, illegality and outright fraud were involved, such as in the widespread knowing and deliberate misrepresentation of financial information like credit worthiness and income of mortgage loan applicants for the express purpose of satisfying lending criteria designed to exclude applicants with insufficient financial qualifications for home mortgage loans (Bradley, 2008; Lowenstein,

2007).

Just as in the scenario in the hypothetical scenario, virtually every ethical analysis and every line of legal reasoning would have required anyone working within the mortgage and loan industry to report apparent instances of material misrepresentations

(Friedman, 2005; Halbert & Ingulli, 2007). The fact that so many mortgage brokers, lending officers, and mortgage applicants deliberately falsified their application information violated general utilitarianism by virtue of the ultimate (combined) effect on so many other people and entities. Those acts of fraud violate federal and state law

(Bradley, 2008), and therefore, violated rule utilitarianism as well (Mihaly, 2007;

Rosenstand, 2008). Because the conduct was motivated by profit and greed at the expense of others, it also violated virtue ethics (Hursthouse, 1999).

The harder question concerns the ethical conduct of the financial executives who knowingly conceived, facilitated, and executed extremely risky investment practices

(Nocera, 2009), because technically, some of the most destructive courses of action throughout the financial investment industries were perfectly legal (Bhide, 2009).

Certainly, some investment bankers understood all along that the mortgages and other extensions of credit they continually promoted and pushed through lenders and brokers were inherently defective because of the complete breakdown in traditional practices in the realm of due diligence in lending. Many of them could not argue in good conscience that they were unaware that the complex mortgage-backed securities they peddled as

"AAA"-rated securities no longer qualified for such high ratings because of the inherent comparative worthlessness of un-vetted mortgage loan obligations (Bhide, 2009; Nocera,

2009).

In many cases, mortgage applicants were complicit in the fraud, in which case their conduct was also ethically unjustifiable. However, it also appears that a substantial number of so-called subprime mortgage recipients were genuinely duped into variable-rate mortgages by mortgage brokers who deceived them, or at the very least, failed to disclose information in such a way that their clients understood the risks… READ MORE

How to Reference "Ethical Issues in Business the Duty" Thesis in a Bibliography

Related Thesis Papers:

Management Ethics Current Ethical Issues Essay

Management Ethics

Current Ethical Issues in Management

There is hardly a managerial or business situation imaginable that does not involve at least some ethical considerations. Each decision that a business… read more

Essay 2 pages (536 words) Sources: 1 Style: MLA Topic: Business / Corporations / E-commerce

---

Insider Trading Legal and Ethical Issues Term Paper

Insider Trading: Legal and Ethical Issues

Illegal insider trading can be defined as buying or selling stocks based on information that has not yet been made public in order to… read more

Term Paper 8 pages (2839 words) Sources: 9 Topic: Business / Corporations / E-commerce

---

Walmart Ethical Issues at Wal-Mart Case Study

Walmart

Ethical issues at Wal-Mart

Wal-Mart is the largest retailer within the United States and it is an epitome of corporate success within the country. The organization has also strives… read more

Case Study 4 pages (1159 words) Sources: 4 Topic: Business / Corporations / E-commerce

---

Business Plan for Organic Fertilizer Business Plan

Business Plan for Organic Fertilizer

Business Plan for an Organic Fertilizer Company

A company in this day and age should be environmentally aware and take steps to protect the planet.… read more

Business Plan 8 pages (3068 words) Sources: 8 Topic: Business / Corporations / E-commerce

---

Tiffany Authentic Assessment Case Study

Ethical Issues That Are Raised

A) An Explanation Of Why These Issues Are Ethical Issues

As one defines ethical issues -- "problem or situation which requires a person or organization… read more

Case Study 7 pages (2228 words) Sources: 3 Topic: Business / Corporations / E-commerce

---

View 100+ more related papers  >>