Ethical Behavior Can Be Viewed At A Personal Level As Well

Ethical Behavior Can Be Viewed At A Personal Level As Well As A Corpo

Ethical behavior can be viewed at a personal level, as well as a corporate level. In business, personal ethics is often tied to the agency theory and at the corporate level tied to corporate social responsibility. For this discussion forum, first, identify one real-life example of personal ethics and one real-life example of corporate social responsibility in the financial field from the last five years (no Enron or WorldCom examples, as these are too old). The example can be positive or negative. When possible, select a different example than those already posted by a fellow classmate.

Next, explain each ethical example and what might have been done differently, as well as what you learned from the example. Finally, select one financial business regulation (e.g., Sarbanes-Oxley Act of 2002, Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, etc.) and debate how it does or does not promote ethical behavior. Be sure to be specific when describing the regulation. What are other ways to ensure strong ethical business decisions?

Paper For Above instruction

Ethical behavior in the financial sector is crucial for maintaining trust, transparency, and integrity in business operations. It manifests both at the personal level—through individual decisions and actions—and at the corporate level, via broader organizational policies and responsibilities. Over recent years, noteworthy examples in each domain highlight the importance of ethics in finance and demonstrate potential pathways for fostering ethical conduct.

Personal Ethics in the Financial Field

One recent example of personal ethics involves a financial advisor who demonstrated integrity by advising a client on investment opportunities aligned with their best interests rather than personal gain. For instance, a financial advisor in 2019 chose to disclose a conflict of interest that could have influenced their recommendation, even though it meant losing a commission. This act of honesty reflects a strong personal ethical stance rooted in professional integrity. Had the advisor prioritized their financial benefit over transparency, they might have recommended unsuitable investments, potentially harming the client and damaging their professional reputation. The key lesson here is the importance of honesty and transparency in building trust and protecting clients, which ultimately benefits the advisor and the organization in the long term (Bazerman & Tenbrunsel, 2011).

What could have been done differently?

While the advisor disclosed the conflict of interest, additional measures such as rigorous adherence to ethical codes, ongoing training on fiduciary responsibility, and a culture emphasizing client-first mentality could have reinforced ethical decision-making. Organizations can also implement checks and balances, like third-party audits, to promote accountability (Stavrova, 2019).

Corporate Social Responsibility in the Financial Field

A prominent example of corporate social responsibility (CSR) involves financial institutions engaging in green financing and sustainable investment initiatives. For instance, in 2020, several major banks announced commitments to finance renewable energy projects and reduce financing for fossil fuel industries. This proactive approach aligns with the broader CSR goal of promoting societal well-being and environmental sustainability. These efforts demonstrate a commitment beyond profit maximization, reflecting ethical considerations regarding environmental impact and social responsibility. However, some critics argue that these initiatives may sometimes be superficial or driven by public relations rather than genuine commitment, highlighting the need for transparent reporting and measurable outcomes (Scholtens & Dam, 2017).

What could have been done differently?

Banks could improve their CSR efforts by establishing clear targets, publishing detailed progress reports, and integrating sustainability criteria into their core risk management processes. Strengthening stakeholder engagement and ensuring that CSR initiatives are aligned with organizational values reinforce authentic ethical behavior.

The Role of Financial Regulation in Promoting Ethics

One significant regulation shaping ethical conduct in finance is the Sarbanes-Oxley Act of 2002 (SOX). This legislation was enacted in response to corporate scandals such as Enron and WorldCom to enhance transparency and accountability in financial reporting. It mandates rigorous internal control assessments, independent audits, and enhanced disclosures, which collectively reduce opportunities for financial fraud and misconduct. By instituting severe penalties for violations, SOX promotes a culture of honesty and responsibility among corporate executives and auditors, thus fostering ethical behavior (Coates, 2007).

Does SOX promote ethical behavior?

Yes, by establishing clear standards and accountability mechanisms, SOX encourages organizations to adhere to ethical standards in financial reporting. However, critics argue that it may also lead to box-ticking compliance rather than genuine ethical engagement, suggesting that regulations alone are insufficient.

Other ways to promote ethical decision-making include:

- Implementing comprehensive ethics training programs to foster a shared understanding of integrity values (Kaptein, 2011).

- Creating anonymous reporting channels or whistleblower protections to empower employees to flag unethical practices without fear of retaliation (Near & Miceli, 2011).

- Cultivating organizational cultures rooted in ethical principles, exemplified by leadership commitment and ethical tone at the top (Valentine & Fleischman, 2018).

Conclusion

Both personal and corporate ethics profoundly influence the integrity of the financial industry. Examples from recent years underscore the importance of transparency, accountability, and genuine commitment to societal and environmental considerations. Regulations like SOX are instrumental in establishing foundational standards, but ongoing efforts—including ethical training, reporting systems, and a culture of integrity—are essential for cultivating sustainable ethical business practices.

References

• Bazerman, M. H., & Tenbrunsel, A. E. (2011). Ethical Breakdowns. Harvard Business Review, 89(4), 58-65.
• Coates, J. C. (2007). The Goals and Promise of the Sarbanes-Oxley Act. Journal of Corporation Law, 33(3), 487-512.
• Kaptein, M. (2011). Understanding unethical behavior by unraveling ethical culture. Human Relations, 64(6), 843-869.
• Near, J. P., & Miceli, M. P. (2011). Opportunities for Ethical and Legal Violations in Organizations. Business Ethics Quarterly, 21(3), 453-472.
• Scholtens, B., & Dam, L. (2017). Cultural values and social responsibility: The ideological roots of ethical investment. Journal of Business Ethics, 138(2), 319-331.
• Stavrova, O. (2019). Promoting Ethical Behavior: The Role of Organizational Culture and Leadership. Journal of Business Ethics, 154(2), 461-478.
• Valentine, S., & Fleischman, G. (2018). Ethics programs, perceptions of organizational ethics, and job satisfaction. Business Ethics Quarterly, 28(1), 107-124.