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Portfolio II.F: Corporate Ethics
Read the following:
Corporate Ethics: Right Makes Might
"These Yet to be United States"
Can Businesses Still Save the World?
What Comes Next?
New Corporate Ethics
Can Corporations be Ethical?
The Capitalist Threat
The Social Responsibility of Business
Discussion Questions
Essay Questions
Related Articles
ASSIGNMENT:
Considering the class presentation on this issue and the information you have read in the links above, write a one page response to this issue. The following questions may give you some things to think about as you write your response:
What has happened this past year with these major corporations?
Who are the major players?
What are their concerns and motivations of each?
What are the justifications for the actions of each side?
Summarize the ethical concerns of this issue?
Whose individual rights or what community rights are being violated, if anyone's?
What harm is coming to individuals or the community?
Who is gaining at the expense of others?
What considerations were made (if any) when this (un)ethical action was taken?
Is the cost worth the benefits?
Evaluate the situation ethically:
Discuss your opinion of this situation ethically and each person/community in it, discuss reasons for your conclusions, then discuss solutions and corrective approaches to this in light of your evaluation.
Are business and corporate ethics changing as a result of what has happened? Why or why not? If so, is this a lasting change?
Investigate recent corporate ethical transgressions and issues:
ENRON:
Browse the web links at this page:
CorpWatch: Enron
Links to 9/11
WORLDCOM
WorldCom's Collapse
Turmoil at WorldCom: Retirement Money: Irate at Scandals and Big Losses, Pension Funds Are Going to Court
CorpWatch: WorldCom articles
Other companies in the news for ethical misconduct:
Tyco International
Dynergy
Adelphia
OUR LEADERS
Lawmakers Court Business While Deploring Its Misdeeds
Corporate Conduct: The President: Bush Defends Sale of Stock and Vows to Enhance S.E.C.
More Reading: Abstracts of Recent Articles on Enron, WorldCom, and Ethical Reform:
Government, Corporations, and Business
EDITORIAL DESK | July 21, 2002, Sunday
The Confidence Crisis
(NYT) Editorial 641 words
Late Edition - Final, Section 4, Page 12, Column 1
LEAD PARAGRAPH - Wall Street's alarming dive in recent weeks, capped by the 390-point drop in the Dow on Friday, may just be another example of the irrationality that can sometimes grip the markets. The recovery, after all, has been progressing fairly well, and Alan Greenspan advised Congress last week that the economic outlook was reasonably promising. But economic fundamentals are being overrun by a host of uncertainties, which begin with doubt about America's corporate elite and end with concern about shaky leadership in Washington.
Although investors, watching their assets and retirement funds vanish, may wish that the Bush administration could end the market slide with a snap of the finger, everyone knows capitalism does not work that way. The president cannot simply add Wall Street bears to his list of evildoers and declare war on plunging equity prices. Still, it's hard to imagine an administration in a worse position to deal with the crisis of confidence in American business. Mr. Bush himself is a product of the cowboy end of the Sunbelt economy, and if Americans look at him and see the shadow of Enron ethics and WorldCom accounting, his effectiveness as chief executive will be undermined.
Corporate Reform by Politicians?
NATIONAL DESK | August 8, 2002, Thursday
In Twin Speeches, Bush and Cheney Vow to Fight Fraud
By EVELYN NIEVES with ELISABETH BUMILLER (NYT) 1187 words
Late Edition - Final, Section A, Page 21, Column 1
ABSTRACT - Pres Bush, speaking in Jackson, Miss, and Vice Pres Dick Cheney, speaking in San Francisco, defend administration's stewardship of faltering economy and vow to punish corporate misconduct; twin speeches underscore how much political heat administration is feeling on issue of corporate wrongdoing and are part of White House strategy to reassure investors about state and economy; Cheney deflects question about investigation of accounting practices at Halliburton, oil services company he used to run; Bush says blame for nation's economic troubles lies with his predecessor, attacks of Sept 11 and continuing corporate scandals; photos (M)
BUSINESS/FINANCIAL DESK | July 12, 2002, Friday
CORPORATE CONDUCT: WHITE HOUSE MEMO; How a Clear Strategy Got Muddy Results
By DAVID E. SANGER (NYT) 1180 words
Late Edition - Final, Section C, Page 1, Column 2
ABSTRACT - Pres Bush's speech promising crackdown on unethical executives fails to reassure Wall Street because Vice Pres Cheney, former chief executive executive, argued vociferously inside White House that creating new felonies or making it easier for shareholders to sue chief executives would drain corporate America of its risk-taking spirit and take toll on economy's growth; some analysts believe White House overestimated Bush's sway over markets; critics say Bush's economic team rarely seems to carry power of Bush's more influential national security advisers; others say Bush's political team spent too much time calculating how speech would play across America and too little time learning lessons of recent and not-so-recent presidential interventions in capital markets; photos (M)
EDITORIAL DESK | July 10, 2002, Wednesday
The Corporate Scandals; Cleaning Up
(NYT) Editorial 688 words
Late Edition - Final, Section A, Page 20, Column 1
ABSTRACT - Editorial says Pres Bush would be more persuasive advocate of corporate reform if he spoke more frankly about money he made selling his faltering oil company to Harken Energy and later selling Harken shares shortly before company's stock price collapsed; says he should also address questionable bookkeeping practices Harken engaged in while he served on its board (M)
BUSINESS/FINANCIAL DESK | July 10, 2002, Wednesday
CORPORATE CONDUCT: NEWS ANALYSIS; Hard Talk, Softer Plans
By FLOYD NORRIS (NYT) News Analysis 1571 words
Late Edition - Final, Section A, Page 1, Column 4
ABSTRACT - News analysis of Pres Bush's speech on corporate ethics and malfeasance finds that while his words are harsh, his proposals for change are generally not daring or innovative; Bush challenges companies to stop lending money to their executives, but makes no proposals to restrict loans by law or to increase what companies must disclose about them; he calls on chief executives to explain their own pay packages in annual reports, rather than in proxy statements, but calls for no new disclosures, let alone limits on compensation; Bush also limits punishment proposals to those convicted of crimes, well short of what SEC has sought; calls for more independent directors with more power are already sure to be adopted; key Bush proposal is for 'financial crimes SWAT team' to oversee prosecutions because US attorneys are often reluctant to bring fraud charges against executives whose high-priced defense lawyers argue that accounting rules are unclear; Bush is largely silent on regulation of accountants (M)
EDITORIAL DESK | July 2, 2002, Tuesday
Everyone Is Outraged
By PAUL KRUGMAN (NYT) Op-Ed 738 words
Late Edition - Final, Section A, Page 21, Column 6
ABSTRACT - Paul Krugman column says Pres Bush's supposed outrage about WorldCom is hard to take seriously; notes administration has steadfastly opposed any significant accounting reforms, and sudden outbreak of moral clarity may have something to do with mounting public dismay over crooked corporations; recalls that Bush was on board of Harken Energy, which came under fire in 1989 for its accounting practices, and that his sale of most of his stake shortly before shares tumbled was deemed illegal by Securities and Exchange Commission but charges were never filed (M)
BUSINESS/FINANCIAL DESK | July 25, 2002, Thursday
CORPORATE CONDUCT: THE IMPACT; Both Sides Say Bill Addressing Business Fraud Is a First Step
By JONATHAN D. GLATER and DAVID LEONHARDT (NYT) 1195 words
Late Edition - Final, Section C, Page 1, Column 5
ABSTRACT - Few business leaders or major investors are happy with everything in corporate-governance bill Congress agreed to, but almost everyone says it is much better than nothing; accountants, executives and investors say legislation could help restore confidence in stock markets; bill approved contains nearly all provisions passed by Senate, rather than those of milder House bill; that left Democrats and advocates for shareholders' rights generally more pleased than corporate lobbyists, who tried to alter Senate bill over last week; Securities and Exchange Commission's former chairman Arthur Levitt, US Chamber of Commerce executive vice president Bruce Josten, Council of Institutional Investors executive director Sarah Teslik, PricewaterhouseCoopers chief executive Samuel A DiPiazza Jr, National Association of Manufacturers vice president Dorothy Coleman and Columbia University Prof John C Coffee Jr comment (M)
BUSINESS/FINANCIAL DESK | July 12, 2002, Friday
CORPORATE CONDUCT: THE MAVERICK; McCain Urges Corporate Change And Resignation of S.E.C. Chief
By ALISON MITCHELL (NYT) 1121 words
Late Edition - Final, Section C, Page 1, Column 4
ABSTRACT - Sen John McCain, with biting indictment of 'morally challenged executives,' lays out proposals for broad new regulation of business that are far more stringent than those of Pres Bush and leading Democrats, speech at National Press Club; calls for companies to treat stock options as business expense on their financial statements and wants to prohibit top executives from selling shares in their companies while they work there; questioned about whether he is considering independent run for president in 2004, McCain says his only goal is to try and move process of reform as quickly as possible so that economy can be restored; urges Harvey L Pitt to resign as SEC chairman; photo (M)
BUSINESS/FINANCIAL DESK | August 9, 2002, Friday
Pension Officials to Weigh Influence on Wall St. Ethics
By SHAILA K. DEWAN (NYT) 663 words
Late Edition - Final, Section C, Page 2, Column 3
ABSTRACT - Officials who control pension investments in 12 states and 3 cities will meet in New York on Aug 12 to consider how they can force changes in way Wall Street firms do busiess; another five states will participate by telephone; summit will discuss influence of firms' underwriters on their analysts, executive pay, companies that reincorporate offshore to avoid paying US taxes and other corporate practices that institutional investors may be able to influence; photo of Comptroller H Carl McCall of New York (M)
The Corporations: How it happened
BUSINESS/FINANCIAL DESK | July 29, 2002, Monday
New Economy; Like Narcissus, executives are smitten, and undone, by their own images.
By Tim Race (NYT) 1358 words
Late Edition - Final, Section C, Page 4, Column 1
ABSTRACT - Tim Race column holds corporate executives involved in recent scandals many suffer from narcissism, psychiatric personality disorder; holds executives accused of fraud may not have set out initially to break law, but came to imagine themselves as above law; holds stock bubble, in which paper wealth created auras of power and invincibility, seems to have nurtured narcissism; photo (M)
EDITORIAL DESK | August 9, 2002, Friday
Downsizing the Imperial C.E.O.
(NYT) Editorial 700 words
Late Edition - Final, Section A, Page 14, Column 1
ABSTRACT - Editorial says upcoming deadline for chief executives to sign their names to company financial reports is watershed worth celebrating after years in which executives amassed unhealthy amount of unchecked power and infectious greed sometimes reached level of criminal fervor; welcomes other moves toward reform
EDITORIAL DESK | July 11, 2002, Thursday
Cubicle Crimes
By Scott Adams (NYT) Op-Ed 460 words
Late Edition - Final, Section A, Page 23, Column 2
ABSTRACT - Scott Adams Op-Ed article on corporate financial scandals says chief executives are not less ethical than regular employees, but are stealing higher quality of loot than rank-and-file (S)
EDITORIAL DESK | June 28, 2002, Friday
Generally Accepted Accounting Abuses
By Michael H. Granof and Stephen A. Zeff (NYT) Op-Ed 866 words
Late Edition - Final, Section A, Page 27, Column 2
ABSTRACT - Op-Ed article by Professors Michael H Granof and Stephen A Zeff on latest revelations of corporate fraud says much of current displeasure among investors stems from cognitive dissonance about accounting; says academic accountants do not find disclosures at all astonishing in light of Wall Street's obsession with earnings, but what is puzzing is why serious investors are consumed with whether corporations meet their quarterly or annual targets; suggests reforming system by having outside body, such as New York Stock Exchange, name independent panel for each company to work with corporate audit committees to select audit firms and approve fees (M)
EDITORIAL DESK | July 12, 2002, Friday
How Stock Options Lead to Scandal
By Walter M. Cadette (NYT) Op-Ed 744 words
Late Edition - Final, Section A, Page 19, Column 2
ABSTRACT - Walter M Cadette Op-Ed article says stock-option culture is at root of current Wall Street scandals; explains that options, which are not counted as expense and thus inflate earnings, carry powerful incentive to cheat by holding out promise of huge wealth, and all it takes is set of books good enough to send stock price soaring for little while; warns there can be no reform without honest accounting for stock options (M)
BUSINESS/FINANCIAL DESK | October 3, 2002, Thursday
ENRON'S MANY STRANDS: OVERVIEW; An Ex-Official Faces Charges In Enron Deals
By KURT EICHENWALD (NYT) 1922 words
Late Edition - Final, Section A, Page 1, Column 1
ABSTRACT - Enron's former chief financial officer Andrew S Fastow is charged with engaging in vast scheme to use off-the-books partnerships to fraudulently disguise company's financial performance while enriching himself with millions of dollars in Enron's cash; charges--including fraud, money laundering and conspiracy--portray Enron as company where fraud and deceit were workaday mechanisms used to disguise failings of corporation secretly spinning out of control; government complaint implicates other executives and financial institutions--notably Merrill Lynch--as having direct involvement in or knowledge of criminal activities; Fastow surrenders to FBI agents in Houston; he is led in handcuffs to federal courthouse, where judge orders him to be released on $5 million bond, secured by $3 million investment account and several homes; Fastow and his wife surrender their passports; photos (L)
BUSINESS/FINANCIAL DESK | August 28, 2002, Wednesday
Ebbers Got Million Shares In Hot Deals
By GRETCHEN MORGENSON (NYT) 1407 words
Late Edition - Final, Section C, Page 1, Column 2
ABSTRACT - Documents released by House Financial Services Committee show WorldCom Inc's former chairman Bernard J Ebbers received almost one million shares of stock in hot initial public offerings from Salomon Smith Barney over four years; six other WorldCom executives or directors received opportunity to buy thousands of shares as well; among them was chief financial officer Scott D Sullivan, who oversaw company's books during years when $7 billion in accounting misstatements were made; documents show Ebbers received 869,000 shares in 21 companies from 1996 to 2000; largest allocation to Ebbers was 205,000 shares of Qwest Communications that went public in June 1997; Ebbers received 20,000 shares of KPNQwest, representing 2 percent of shares Salomon had set aside for all of firm's individual clients; 10,000 shares of Juno Online Services that Ebbers received in May 1999 represented 1.1 percent of shares firm gave to its entire network of individual investor clients; at issue is whether Salomon handed out such allocations to ensure that companies like WorldCom continued to give firm investment banking business; Salomon has denied it gave Ebbers shares to cement firm's already close relationship with executive and WorldCom; another big recipient was WorldCom director Stiles A Kellett Jr, who received 31,500 shares; also released is Salomon memorandum dated March 31, 1999, that lists clients interested in receiving shares of Rhythms NetConnections, telecommunications company whose stock Salomon was bringing public; one Salomon employee receiving client list was former analyst Jack B Grubman; confirms that Grubman was centrally involved in initial public offering allocation process at firm, as former Salomon employees have said; chart (M)
BUSINESS/FINANCIAL DESK | October 2, 2002, Wednesday
WorldCom to Pay More to Ex-Workers
( By The Associated Press ) 217 words
Late Edition - Final, Section C, Page 13, Column 1
ABSTRACT - WorldCom Inc receives bankruptcy court approval to pay $36 million in severance benefits to some laid-off employees; ruling also permits WorldCom to retract $1.4 million in severance settlements promised to 19 laid-off executives before company filed for reorganization; 19 executives will receive same severance package as rank-and-file workers: up to 26 weeks of salary and benefits; court decision permits 4,000 laid-off workers to receive average of $9,000 each to supplement $4,650 WorldCom already paid (M)
Follow the Leader?
BUSINESS/FINANCIAL DESK | September 27, 2002, Friday
Former Controller of WorldCom Pleads Guilty to Fraud Charges
( By The Associated Press ) 402 words
Late Edition - Final, Section C, Page 2, Column 3
ABSTRACT - WorldCom Inc's former controller David F Myers pleads guilty to securities fraud charges, saying he was instructed by senior management to falsify records; Myers's lawyer calls his client 'reluctant participant'; says he is also negotiating with Securities and Exchange Commission to resolve civil charges filed (M)
Business Schools
MONEY AND BUSINESS/FINANCIAL DESK | September 15, 2002, Sunday
Business; M.B.A. Programs Now Screen for Integrity, Too
By LYNNLEY BROWNING (NYT) 1506 words
Late Edition - Final, Section 3, Page 4, Column 1
LEAD PARAGRAPH - GRADES. Test scores. Work history. Leadership experience. Those are the admissions yardsticks traditionally used by the nation's leading business schools, whose bright, brash graduates fill the top ranks of corporate America.
Now, as accounting and management scandals raise questions about the probity of executives, the schools are trying to check applicants for less tangible qualities: honesty, integrity and ethics.
EDITORIAL DESK | August 20, 2002, Tuesday
An Ethics Lesson for Business Schools
By Robert Prentice (NYT) Op-Ed 844 words
Late Edition - Final, Section A, Page 19, Column 2
ABSTRACT - Robert Prentice Op-Ed article says recent corporate scandals involve not only serious ethics lapses, but also serious violations of business laws; says business schools are partly responsible because they have for decades been marginalizing their business law programs; drawing (M)
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