Feature Channels: Business Ethics

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A Complaint filed October 22, 2009 in Federal District Court in Tampa, Florida alleges that Bank of America was at the center of yet another Ponzi scheme. The operator of this scheme, 27 year-old Beau Diamond, defrauded hundreds of investors from Florida and around the country of at least $37 million. He claimed to be an experienced trader in off exchange foreign currencies. In truth, he had no such experience and was not registered to sell securities or trade foreign currencies for others.

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Although Corporate social responsibility (CSR) initiatives, are not necessarily intended to constitute an endorsement of the brand by the participating nonprofit organization, consumers may perceive them in the way. Two common types of CSR initiatives (licensing associations and cause-related marketing) were studied, and the authors conclude that both may be seen by consumers as explicit seals of approval.

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In a new survey by Deloitte Financial Advisory Services, only 31 percent of respondents indicated that their company had in place a “comprehensive FCPA (Foreign Corrupt Practices Act) compliance program.” Only 32 percent of respondents said their company addresses FCPA risks “proactively.” This is a problem, according to Butler University’s Mike Koehler, assistant professor of business law for the College of Business. U.S. enforcement agencies are initiating FCPA actions at a record-level against large and small companies alike in a variety of industries, and against individuals. No company is immune from FCPA scrutiny.

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New survey from USC Marshall’s Center for Effective Organizations shows that corporate board members support cutting CEO perquisites and support tying pay to company performance.

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For years journalists and others have questioned the ethics of public relations practitioners and firms. People in PR, however, appear to be getting a bad rap. That's what a new study funded by the Arthur W. Page Center for Integrity in Public Communication at Penn State University has found.

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According to a new article based on research by two professors at Indiana University's Kelley School of Business and a colleague at Georgetown University, though, many organizations fail to implement evidence-based policies that encourage whistle-blowers to report wrongdoing internally -- and suffer the consequences.

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Employer tactics against workers' efforts to form unions have increased and are more punitive than in the past, according to a new four-year study by Kate Bronfenbrenner, senior lecturer in the ILR School and director of Labor Education Research.

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Clients of the major accounting firm Arthur Anderson sustained negative stock-market returns following public announcement that the firm had shredded documents related to its infamous Enron audit in 2002. In a new study, a University of Arkansas accounting researcher reports that corporate social responsibility on the part of some of these firms did not prevent a drop in their market value following the Enron audit failure.

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Victims of one of the largest internet-based Ponzi scheme's in history alleged in an amended complaint filed in federal court in Washington, D.C. that a Bank of America branch manager worked directly for AdSurf, the fraudulent entity running the scheme.

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A University of Iowa law students examines why payday lending services are so successful in areas with large populations of evangelical Christians, whose faith suggests they should stay away from such businesses because of Biblical teachings against usury.

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Envy is the new greed according to professors at Washington University in St. Louis. While greed has been blamed for most of financial sector's problems, new research indicates envy is the real culprit. Researches warn envy is driving top talent from Wall Street and the banking industry and it could wreak even more havoc on the economy in the months to come.

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Amid the current economic turmoil, the debate over CEO pay has intensified. Now more than ever, the propriety of large salaries and bonuses for CEOs is leading people to ask, "Are CEOs overpaid?"

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Victims of an Internet-based Ponzi scheme filed a lawsuit against Bank of America and the organizers of the scheme in the U.S. District Court for the District of Columbia. Using elaborate misrepresentations, including numerous video postings on YouTube, organizers induced victims from around the country to purchase so-called "ad packages" from the following entities: AdSurfDaily, AdSurfDaily Cash Generator, Golden Panda Ad Builder, and La Fuente Dinero.

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The Securities and Exchange Commission should directly classify the health of a firm's CEO as a material fact requiring disclosure, which it does not now do. So say researchers in a forthcoming journal article. Their work is timely in light of Apple's announcement that CEO Steve Jobs is taking a medical leave of absence.

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Perhaps the only people who find some delight in the current economic crisis are analysts and ethicists. The financial meltdown has spawned a number of intriguing questions that challenge market paradigms and invite examination of key ethical questions related to business.

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"Walking into a bank with a gun and demanding money from a teller is one way to steal money," says David O. Friedrichs, Professor and Distinguished University Fellow, Sociology/Criminal Justice, The University of Scranton. "Walking into a corporate boardroom and securing from the board's compensation committee, made up of cronies, paid consultants, and even relatives, compensation of millions "“ sometimes tens of millions or hundreds of millions "“ is another way to steal money.

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From Wall Street to Main Street USA, it is fair to say that few people have been immune to today's financial crisis. The fallout has affected 401(k) plans, may cause unemployment and certainly has damaged the psyche of the American consumer who fuels our economy.

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Corporate board members associated with firms that restate earnings may lose their jobs for reasons that have nothing to do with the numbers. Jo-Ellen Pozner, Assistant Professor in Organizational Behavior at the Haas School of Business at UC Berkeley, found that social mechanisms may play a larger role in penalizing board directors than is accounted for in classical economic theory.

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The recent controversy about whether Wal-Mart Stores Inc. unlawfully pressured employees to vote against Democrats in November is another instance of the increasing erosion of free expression in the workplace, according to Bruce Barry, author of a book on this subject.

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Chief executive officers often pursue acquisitions regardless of risk or potential outcome because they know their salaries will increase substantially, leaving shareholders to take the financial hit.

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Disgusted by a seemingly endless parade of executive scandals, former CUNA Mutual Life CEO Irv Burling explains in a new book how companies can grow and prosper without greedy disregard for employees.

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Baylor University's Hankamer School of Business will host its annual Business Ethics Forum entitled "Five Years Later: Leadership Lessons from Enron and Andersen" November 1-3. The forum will discuss some of the major ethical issues and lessons learned from Enron and Andersen, from their rich history and tradition to their demise.

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More corporate boards are becoming actively involved in providing oversight into companies' ethics and compliance programs, according to a report released today by The Conference Board.

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A University of Arkansas finance professor studied 229 firms that laid off employees at least once between 1993 and 1999 and found that governing boards reward chief executive officers for the decision to let employees go. Specifically, for the year after a layoff occurred, CEOs of these firms received 22.8 percent more in total pay than CEOs of firms that did not have layoffs.

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Investor relations professionals retaliate against analysts who don't give favorable stock recommendations on their companies by excluding them from analyst-firm meetings and refusing to answer questions during conference calls, according to a new study.

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Granting options doesn't align managers interests with that of shareholders, Washington University finance professors say. The practice of backdating should come as a surprise.

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Thirty leading accounting, economic, business experts call on SEC to repeal new stock options expensing rule.

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Walking the talk. A company's statements about its ethics must mirror its conduct. Companies and their leaders can establish formal codes of behavior but if they are not reinforced by strong ethical climates, the organizations can be vulnerable to various kinds of wrongdoing.

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An economics professor found that profits and performance can break down discrimination in professional sports leagues and may apply to other labor markets.

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Even model employees can become negative and unproductive if their bosses are rude or mean-spirited, according to a new University of Florida study.

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When people bemoan the lack of honesty in corporate America, images of Enron, WorldCom and Martha Stewart come to mind. But honesty issues have a significant impact on virtually every workplace in America, says consultant Steven Gaffney.

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Foreign country assistance in this area has traditionally been along the lines of food aid and cash donations. To be an effective and sustainable project, local companies need to be involved to create financial development and local economy stimulation.

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The Harvard Medical School Division of Medical Ethics will host a public forum, titled "Soliciting Organs Over the Internet," which will bring together an Internet donor matching service MatchingDonors.com and ethicists to discuss the changing landscape of organ donation.

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"We need to introduce clinical ethicists in hospitals in the United Kingdom," says a researcher in medical ethics.

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According to a recent study, though much has been written about business ethics education, there is little consensus about its effectiveness.

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Regulatory or governmental mandates that call for the implementation of corporate ethics codes do less to influence the strategic decisions of financial executives than pressure from key market-related stakeholders with economic ties to the firm.

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University of Virginia expert on biomedical ethics.

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A study co-authored by UAB forensic accounting expert Tommie Singleton, Ph.D. examined companies with and without clear ethics compliance policies.

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Executives who downplay ethics and values in their decision making may also be the ones who prefer extraordinarily high salaries for themselves.

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Chief executives are increasingly likely to consider conducting independent investigations to help resolve major legal and regulatory dilemmas and challenges to their companies' integrity, The Conference Board notes in a report released today.

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A survey of more than 800 MBAs from 11 leading North American and European schools found a substantial number were willing to forgo some financial benefits to work for an organization with a better reputation for corporate social responsibility and ethics.

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A group of nationally recognized experts made up of ethicists, physicians, toxicologists, and policy analysts released a series of ethical and public policy recommendations regarding the testing of pesticides in humans.

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New governance standards have caused a growing number of boards of directors worldwide to become more involved in companies' ethics programs, according to a report released today. The report includes a far-reaching review of best governance practices on ethics.

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Although it seems timely for AIMR to update its Code of Ethics and Standards of Professional Conduct given recent headlines about problems in the financial services industry, in fact the proposed changes are the result of an 18-month process of drafting and review.

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To explore these increasingly complex issues, UCLA Healthcare has created the UCLA Healthcare Ethics Center. The center's mission is to provide education, service and research to enhance the practice of medicine for patients, families, professionals and the public.

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Baylor University's Hankamer School of Business will focus on the "value of values" Oct. 6-10 during the school's fifth annual Ethics Focus Week. A "Who's Who" of people from the business world will participate in special events, lectures and classroom activities centering on issues of business ethics.

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A communication study shows that bribery of the media is most likely to occur in China, Saudi Arabia, Vietnam, Bangladesh and Pakistan, says a communication expert. As more American companies work with international media, it's important to understand the ethics in other countries.

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Lawsuits, privacy issues and anti-piracy software have made downloading music, videos and other intellectual property daily news. Researchers found 54 percent of respondents in a recent study thought that downloading copyrighted materials was not unethical, even if it was illegal.

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Despite a continuing wave of ethical lapses in major corporations, large numbers of ethics officers say their boards of directors have never received training in ethics or compliance issues, The Conference Board reports in a survey released today.

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Graphic media images of Iraqi civilian casualties raise questions about the boundaries of media ethics and, more importantly, medical ethics.