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busi law: ethics notes from Panopto lecture

by: kmb0095

busi law: ethics notes from Panopto lecture ACCT 2700

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busi law: ethics
Business Law
Robert Hollis Cochran
Study Guide
Busi Law
50 ?




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This 6 page Study Guide was uploaded by kmb0095 on Monday February 8, 2016. The Study Guide belongs to ACCT 2700 at Auburn University taught by Robert Hollis Cochran in Spring 2016. Since its upload, it has received 86 views. For similar materials see Business Law in Accounting at Auburn University.


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Date Created: 02/08/16
Intro to Law Ethics: notes from Panopto lecture 2/8/16 “Never let your sense of morals prevent you from doing what is right.” –Issac Asimov  When we use our morals as a guide, we justify  We try to fit what we want to do into our morals  Its easy to talk ourselves into anything “Ethics is knowing the difference between what you have a right to do and what is right to do.” –Potter Stewart  Just because we have a right to do it, is it right to do? Should we do it?  Free speech – what if its offensive to others? Should we act on it?  Legal responsibility of business o Follow the law o Know the law – ignorance of the law is no excuse o If the law seems unethical, work to change the law o When do you put ethics above the law? {make sure you know whose interest is being protected}  Ex) in the 60s, there were tons of restaurants that said ‘whites only’  Among those who knew it was wrong said ‘tbh we don’t care we just don’t want to eat in the same restaurant as a black’  Difficult time to change unjust laws, but they were to the point of disobeying laws bc they put significant effort in changing the law but nothing happened o Don’t do the crime if you can’t do the time/fine  If we decide to disobey the law, ^^^  30 mph too slow? If you aren’t willing to pay the fine, don’t speed  Ethics o Ethics is the idea of right and wrong behavior; whether an action is fair, right or just o In business, ethical decisions are the application of moral and ethical principles to the marketplace and workplace  what we decide to do in business affects other people  law vs ethics o law and ethics often coincide  bribery is illegal and unethical o law may permit certain behavior that seems unethical  law may permit pollution emissions that post health risks  ex) Alabama power company has a permit that allows them to dump so much pollution into the air even though this amount could affect our health Intro to Law  years ago, Alabama power company had no limits even though people miles away were getting ill  What can we do? We wont shut them down, then we wont have AC and all that power  Act that by itself is unethical, but we had to decide what amount of pollution we could stand in order to have the benefits of Alabama power company o law may demand certain conduct that seems unethical  law prohibits hiring illegal aliens; jobs could assist destitute [impoverished] workers  ex) state leg passed a strict law on immigrant workers, problem was that people that were barely making it suddenly had no jobs  “criminal offence to provide any help to an illegal alien and that fines and jail time would be put in means of punishment”  very unethical, but ex) if we saw someone in a bad car accident we wouldn’t check their ID before giving them aid despite the threat of jail times/fines  we have a moral duty to aid others, unethical to ask them to see their ID before helping them  business ethics: why is business ethics important? o Directors and officers owe a complex set of ethical duties to others (in the company and outside) o When these duties conflict, ethical dilemmas are created  Ethical theories: {look at examples, especially Utilitarianism and Kantian Ethics} o Personal ethics:  Ethical fundamentalism  A person looks to an outside source (Bible/VBS, Torah) or a central figure (Jesus, Marx, Mao) for ethical guidance  We usually start doing this this when we are little/impressionable  We just believe someone else, we don’t really think about it  Utilitarianism  Choosing the alternative that would provide the greatest good to society, not to individuals o Bill Gates  Is it fair that he has as much money as he has?  $60bil, is this allowing him to provide the greatest good to society? Intro to Law  What if this was unfair? What if we decided to divide it to every single person on the earth? Would this be fair to everyone?  If we divided this out, we would all get around $181 each. Is that good for each individual?  If we took this money away and gave it to each individual, it’d go away from everything he’s already invested in which would essentially take away from the business world  Not beneficial to society as a whole  Kantian ethics  A set of universal rules establishes ethical duties, which are based on reasoning and require consistency in application and reversibility  Based on: do unit others as you would have them do unto you o Should apply to everyone, not just one person o Ex) if the home team of a football game always got two extra possessions, would that be fair?  To the home team yes, to the visiting team no  but when that home team goes away it would be fair anymore  golden rule ^^  Rawl’s social justice  Ethical duties are based on an implied social contract o We have obligations to treat each other fairly and not to harm them (like Kantian ethics)  Fairness is the essence of justice  Ex) cost $1 to produce this product o Everyone wants it o Charge $2 for it o Violated social contract? No, they’re willing to give the $2 for it even though they know it takes $1 to make it, no harm done  Ex) iPhone o Took like $85 to make but sold for $600 o Wrong? No because people are willing to pay that $600 for it, no harm done Intro to Law  Ex) if a power company randomly jacked up their prices and said its okay the rich can still pay, is that wrong? o Yes, unfair advantage especially if they had no other choice  Ethical relativism  Individuals decide what is ethical based on their feelings as to what is right or wrong  Problem? o What’re the chances everyone will make a choice as to what is right or wrong? o Break this down, it would lead to anarchy o We have a better chance if we let society make those choices rather than individuals o Business ethics: {know how to solve these problems}  Maximizing profits  Business goal: max profit  Ex) “the public be damned.” o Vanderbilt had more money that the gov’t like he was super rich and was like hmm the profits aren’t up enough bc cost went up but we didn’t raise prices so we’re adding another nickel to the prices o Most people didn’t have that extra nickel to get to work, those who can afford it have to take money out of their children’s lunch money o He didn’t have duties to anyone except his business, had to balance and in order to do that he had to raise prices  Ex) love canal o Company named “Love” in the canal business, back before railroads o Realized you can do a lot more by traveling on canals rather than carrying everything on your back by foot o Canal business = booming o Love Canal close to Buffalo, NY o Canals became unprofitable when railroads came into play, Love Canal became bankrupt o Nobody monitored the canal after bankruptcy o Tons of toxic wastes, so everyone dumped their toxic waste in the Love Canal o Health officials in the 50s became aware of all the birth defects and cancer and whatnot Intro to Law around the area, someone realized it could be related to Love Canal o Those dumping the toxic waste just had profits in mind, not ethics involved  Moral minimum  Business goal: max profits while avoiding harm and compensating for any harm caused  Businesses had to look at harm causing, better to avoid harm rather than compensate  If Alabama power company spews soot and stuff out, they have to pay for damage to the paint on my car  However, if someone loses an arm while working, how do you compensate for that? How much is an arm worth?  How do you calculate all harm? Is it possible to really compensate for some harm?  Good improvement, but not where we should end up  Stakeholder interest  Business goal: max profits while considering the interest of all stakeholders (all those with a ‘stake’ in the operation of the business)  Who is that though? Owners, employees, customers, creditors, supplies, local community, etc.  Too many to compensate for all stakeholders  Corporate citizenship  Business goal: to do well and solve social problems  What’s missing? Do we really want business to expand resources trying to solve social problems? o Foreign Corrupt Practices Act (FCPA)  Original FCPA established criminal penalties for bribery in international commerce  FCPA as practiced today, bribery is allowed if it is legal under the laws, customs, or traditions of the foreign country and does not occur with foreign political officials, and is not an attempt to change governmental policy  Today the FCPA is a ‘gray’ area of law fraught with high risk:  IRS curious about court returns having a lot of miscellaneous expenses (bribes to foreign officials)  IRS outraged, goes to Congress and congress was pissed  Passed this law (FCPA) so people quit bribing Intro to Law  Other countries don’t even understand bribery, some don’t have words for it, its not a big deal like it is here  Other countries sometimes see it as a ‘business tax’  Customs officials in foreign countries stopped rushing our goods bc they didn’t get the ‘business taxes’ they were used to, because bribery was illegal for us  Other countries kept paying bribes while we couldn’t so we fell behind in international business  Congress realized we weren’t making as much money bc we weren’t paying as many taxes bc FCPA messed it all up  Congress passed an act modifying the FCPA to what it is now saying don’t try to enforce FCPA if its legal or the custom of an international country  Just bc its right here, doesn’t mean its right everywhere else o Sarbanes-Oxley Act  Makes corporate officers personally responsible for criminal acts of subordinates acting in the interest of the corporation  Ex) Corporate officers specifically in charge of financial statements/records of offices  CEOs commit tons of fraud and get away with it by saying my accountants at fault idk what’s happening  This law makes them responsible  Also requires a publicly traded corporation to publicly state whether the corporation has a “Code of Ethics”  Companies have different codes of ethics if any at all, requirement to say whether you have one or not and to state what it is


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