Unethical Behavior in Business

Paper Summary:

The paper explains that the main reason CEOs behave unethically is the stock market that encourages them to go to all lengths to have a high stock value. The paper shows how Enron became one of the most powerful companies in the world through fraud and then describes its eventual collapse. The paper then examines the procedures and internal controls needed in a company to protect against unethical behavior.

Outline:
The Root of Unethical Behavior in the Financial Community
The Death Sentence Lack of Ethics Provided to Enron
Procedures Needed in a Company to Protect Against Unethical Behavior

From the Paper:

"Companies that do not behave in the ethical manner that society expects will eventually suffer in terms of profit. The temporary gain in profit that companies see because of their unethical behavior is erased one hundred fold if the deception is discovered. Yet, so many CEOs practice this type of behavior. They jockey the financial position of the company to influence share prices. One of the more elaborate situations in recent years involved Enron. The company's executives so badly wanted to leverage debt, that they dumped debt in tailor made limited liability partnerships (LLPs) and skirted all kinds of financial laws. CEOs make moves everyday to try to affect the price of stock. In a way, these actions are a testament to the growth and power of the stock market."

Sample of Sources Used:

• Akhigbe, A, Madura, J., and Martin, A. D.(2005, July 1). Accounting contagion: the case of Enron. Journal of Economics and Finance 29.2: 187-202. http://www.allbusiness.com/finance/3502611-1.html
• Glassman, J. K. (2002, January 18) Diversify, diversify, diversify. Wall Street Journal [New York, N.Y.] Eastern edition: A10. http://www.opinionjournal.com/editorial/feature.html?id=95001750
• Hamilton, S. (2004, June 4). Enron unravelled. European Business Forum. 66-71. http://www.accessmylibrary.com/coms2/summary_0286-3847472_ITM
• Supanvanij, J. (2005). Does the composition of CEO compensation influence the firm's advertising budgeting? Journal of American Academy of Business, Cambridge 117-123.
• Wilson, A. and Campbell, W. (2003, January-March) Enron exposed: Why it took so long. Business and Economic Review. 6-10. http://mooreschool.sc.edu/moore/research/Publications/BandE/bande49/49n2/enron.html

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