O'Reilly logo

Managing Business Ethics: Straight Talk about How to Do It Right, 6th Edition by Katherine A. Nelson, Linda K. Treviño

Stay ahead with the world's most comprehensive technology and business learning platform.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, tutorials, and more.

Start Free Trial

No credit card required

CHAPTER 10

ETHICAL PROBLEMS OF ORGANIZATIONS

INTRODUCTION

In August 2009, the International Monetary Fund estimated that the global financial crisis of 2008–09 would cost the world an estimated $11.9 trillion—enough to provide a gift of $2,880 to every man, woman, and child on the planet.1 It is, in a word, staggering. (See the chart detailing the squandered wealth in Chapter 1.)

Long before this recent financial crisis or the collapse of Enron in 2001, a number of business ethicists and business professionals watched with concern as Wall Street analysts demanded increasingly strong corporate financial performance to support rising corporate stock prices. At the same time, the gargantuan compensation packages (including stock options) of the top executives running these companies became inextricably linked to their companies' stock prices. In 1973, average CEO pay at major corporations was 27 times the pay of the average worker.2 By 2012, the average CEO was earning 380 times what the average worker earned.3 Experts warned of a bubble—even Alan Greenspan, head of the Federal Reserve, cautioned against “irrational exuberance” in the markets.4 But few predicted how bad things would get.

In a June 2002 interview on PBS's Frontline, Arthur Levitt, former head of the Securities and Exchange Commission (SEC), explained how stock prices influence executives and their ethical decision making (or lack thereof): “There is an obsession with short-term earnings and short-term results, and ...

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, interactive tutorials, and more.

Start Free Trial

No credit card required