Financial executives insist that there should be no separation between an indivi

Question

Financial executives insist that there should be no separation between an individual's personal ethics and his or her business ethics. "It's a jungle out there" and "business is business" should not be excuses for engaging in unethical behavior. Many firms have ethics codes which are based on economically rational concepts such as integrity and trustworthiness, which guide the decision maker in attempting to increase shareholder wealth. Of course, some employees sometimes choose to not comply with their firm's ethics code. How do ethics codes apply to project selection and capital budgeting? What are the potential risks to a company of unethical behaviors by employees? What are potential risks to the public and to stakeholders? Please explain how Saint Leo’s core value of integrity is reflected in your answer.

Explanation / Answer

Ans: Ethics for the business set for doing the things in a right way and towards the mission and vision of the company, it is set of rules which must have to be followed in order to do business and decision making, thus while selecting the project and making the capital budgeting decision ethics helps in rejecting the projects which do not go along with companies mission and ethics, suppose a company has set a rule that it will not buy a machine which generates more pollution then this business guidelines and ethics will help in not selecting that machine though it might be financially a good decision.

Some of the potential risk to the companies in case non compliant of ethics by its employees are like tarnishing the brand image of the company, attracting some statutory penalty, loosing the customer base, losing the value of the assets, stealing the company assets. Potential risk to the public and stakeholders are like loosing their wealth/ money invested in the company, wealth erosion. Saint leos core value of integrity says that one should act very honestly and be the responsible of their deeds, should be truthfull, hence here also in the answer if employees are honest, truthful and responsible to their act, follow the ethics it wiuld be greater goods for company and themselves else, it will fetch them a loss, a loss of loosing job, a loss of company going bankrupt. Etc.

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