1-7 BUSINESS ETHICS
As a result of the financial scandals occurring during the past decade, there has
been a strong push to improve business ethics. This is occurring on several fronts—
actions begun by former New York attorney general and former governor Elliot
Spitzer and others who sued companies for improper acts; Congress’ passing of
the Sarbanes-Oxley bill to impose sanctions on executives who sign financial
statements later found to be false; Congress’ passing of the Dodd-Frank Act to
implement an aggressive overhaul of the U.S. financial regulatory system aimed at preventing reckless actions that would cause another financial crisis; and business
schools trying to inform students about proper versus improper business actions.
As noted earlier, companies benefit from having good reputations and are
penalized by having bad ones; the same is true for individuals. Reputations reflect the
extent towhich firms and people are ethical. Ethics is defined in Webster’s Dictionary as
“standards of conduct or moral behavior.” Business ethics can be thought of as a
company’s attitude and conduct toward its employees, customers, community, and
stockholders. A firm’s commitment to business ethics can be measured by the
tendency of its employees, from the top down, to adhere to laws, regulations, and
moral standards relating to product safety and quality, fair employment practices, fair
marketing and selling practices, the use of confidential information for personal gain,
community involvement, and illegal payments to obtain business.