Ethic and Social Responsibilities
Anthony Burroughs
FIN 475
January 19, 2009
Ethic and Social Responsibilities
“Strict government regulations are necessary to make companies behave ethically.” (Steffey, 2006) In the past business ethics was viewed as just a legal document that needed to be on hand and not strictly followed. Most times they would just make up their own internal codes and regulations. Nowadays, businesses are being held more accountable for their unethical practices. This change is grossly due to many corporations displaying unfavorable actions within their business conducts. This behavior could not continue on. Shareholders have demanded that stronger ethical practices be put in place. In this paper, I will discuss the above statement examining it in the context of ethics and social responsibility. I will also examine the impact government regulations have had on the ethics and social responsibility, and lastly why I believe that this statement is very true.
A company starting out has to come up with a business plan if they hope to get investors. In that plan an investor is most interested in the risks involved and the amount of gain on capital they will receive. If there weren’t any regulations and laws set by the government, businesses could drastically overstate these values and never be held accountable for their actions. This may not be so bad if 99% of the time businesses were honest and forthcoming with this information, but that isn’t the case. Therefore after many corporate scandals broke out, government officials chose to instate the Sarbanes-Oxley Act of 2002. This came at the outrage of investors. It was determined that if it had been left up to the corporate world’s ambitions millions, maybe even billions of investor dollars would have been exploited.
The Sarbanes-Oxley Act establishes the Public Company Accounting Oversight Board to monitor independent accounting firms. This ensured that senior...