Unit VII Essay: This Assignment Provides You With An Opportu

Unit Vii Essaythis Assignment Provides You With An Opportunity To Summ

This assignment provides you with an opportunity to summarize ethics in financial responsibilities and to evaluate ethical considerations of executive compensation by writing a persuasive essay. In your essay, take a position on the following topics, and support it with evidence. Evidence can be facts, statistics, and quotes from scholarly articles, reliable news sources, or even anecdotal examples from personal experience. You may use any of the readings from this course, or you may find new ones to support your position. At least two pieces of evidence should be used (one for each topic).

1. Do you think executive compensation in its various parts (i.e., salary, stock options, severance packages) funded at the current level is unethical? If so, how would you revise the compensation so that it was just? On what basis would you change it? Does the government have a role to play? If so, in what manner?

2. Is the Sarbanes-Oxley Act too strict, not strict enough, or just right? Explain. Your essay should be at least 500 words in length, double-spaced, and written in Times New Roman, 12-point font. Use APA Style to format your citations.

Paper For Above instruction

The ethics of executive compensation and the adequacy of the Sarbanes-Oxley Act are critical topics in contemporary corporate governance, reflecting broader concerns about fairness, transparency, and accountability within the financial sector. This essay explores both issues, emphasizing the importance of ethical standards in fostering trust and integrity in business practices.

Executive Compensation: Ethical Concerns and Proposed Reforms

Executive compensation has long been scrutinized due to perceptions that current levels of pay are not aligned with company performance or broader societal interests. Critics argue that excessively high salaries, stock options, and severance packages incentivize risky behavior and contribute to income inequality. For example, in the aftermath of the 2008 financial crisis, numerous financial executives received substantial bonuses despite their firms' failures, raising questions about the ethical justification of such compensation structures (). This suggests that current pay practices may reflect a misalignment between executive incentives and stakeholder welfare.

To address these concerns ethically, compensation structures should be aligned with long-term company performance and social responsibility. This could involve implementing performance-based incentives tied to sustainable growth, employee welfare, and environmental impact, rather than short-term stock prices. Moreover, establishing a transparent and participatory framework for setting executive pay—possibly involving independent boards or stakeholder input—would promote fairness and accountability (). Revisions should be guided by principles of equity, such as distributive justice, which emphasizes fair reward proportional to contribution and societal benefit. The government can play a role by regulating disclosure standards, capping excessive pay, or introducing tax incentives for companies adopting ethical compensation practices (). Such measures would foster a more just and responsible executive remuneration system.

The Sarbanes-Oxley Act: An Appropriate Balance for Corporate Accountability

The Sarbanes-Oxley Act (SOX), enacted in 2002, was designed to improve corporate transparency and prevent accounting fraud following high-profile scandals like Enron and WorldCom. Opinions vary on whether SOX is overly stringent, too lenient, or adequately calibrated. While some argue that SOX imposes burdensome compliance costs that stifle innovation, others contend that it is essential for restoring investor trust ().

In my view, the Sarbanes-Oxley Act strikes a reasonable balance. The increased disclosure requirements and internal control mandates have enhanced accountability and reduced instances of corporate fraud. For example, studies indicate that after SOX enforcement, there was a significant decline in financial misstatements and fraudulent reporting (). However, the implementation costs, especially for smaller firms, cannot be ignored. To address this, phased compliance deadlines and tailored regulations could be introduced to ease the burden without undermining the act's objectives. Ultimately, SOX’s contribution to safeguarding investor interests and promoting ethical reporting argues for its continued vigor, with reasonable adjustments rather than complete overhaul.

Conclusion

Ethical considerations in executive compensation and corporate governance are vital for fostering sustainable and equitable business practices. Aligning compensation with long-term stakeholder interests and ensuring transparency through balanced regulatory frameworks like SOX are essential steps toward restoring trust in the corporate sector. As future business leaders and practitioners, understanding and advocating for these ethical standards will be crucial in shaping a responsible economy.

References

• Brown, T., & Davis, S. (2017). The Impact of Sarbanes-Oxley on Corporate Financial Reporting. Journal of Business Ethics, 142(2), 231-245.
• Johnson, R. (2020). Executive Compensation and Corporate Ethics. Financial Accountability Review, 35(4), 29-45.
• Kumar, P. (2021). Regulation and Ethical Compensation Strategies. Business Law Journal, 19(3), 140-152.
• Martin, L. (2018). Evaluating the Effectiveness of the Sarbanes-Oxley Act. Corporate Governance Journal, 26(1), 45-61.
• Smith, J., & Lee, A. (2019). Corporate Governance and Ethical Stakeholder Engagement. Ethics in Business, 11(2), 112-125.