Ethical Behavior

Personal ethics are principles that individuals use when making decisions and influence how they act; examples of personal ethics are honesty, loyalty, integrity, respect, selflessness, and responsibility. Because each person has their own set of ethical values and develops their ethical code through unique situations, we all act differently given different situations. I will use a real-life example of a personal ethical decision that resulted in a negative outcome. Every year we are required to complete a code of conduct virtual class. The training takes approximately 45 minutes to an hour to complete. At the end of the learning is a required multiple-choice exam in which you are required to achieve a score of 100%. You can take the exam as many times as you must to reach this objective without being required to repeat the learning.

However, it was explicitly noted that the exam answers were not to be shared with others. I had a senior leader who took screenshots of the exam with the correct answers and shared them with some of her direct reports and peers, struggling to achieve the required 100% on the exam after numerous attempts. As a result of their actions, this leader was eventually terminated, and those who shared the answers were placed on behavioral improvement actions for lack of integrity.

Beal identifies corporate social responsibility as “how businesses align their values and behaviors with the expectations and needs of stakeholders – not just customers and investors, but also employees, suppliers, communities, regulators, special interest groups and society as a whole” (2013, p. 4). It is the moral and practical obligation that companies must act in a manner that not only delivers profits to their investors but also to do it while positively makes society a better place. It is difficult, if not impossible, to find a large organization not committed to social responsibility. For example, I will use CVS Health’s commitment to addressing housing insecurities in underserved communities. In 2021 CVS Health committed $185 million in affordable housing in challenged communities (CVS Health, 2022). This commitment is part of CVS Health’s Health Zones initiative, designed to reduce health disparities in high-risk communities. The initiative addresses “six key social determinants of health: housing, education, access to food, labor, transportation, and health care access” (CVS Health, 2022, para. 13).

In the leader’s example, with a lapse of integrity, they could have found alternative means to assist those on their team struggling to complete the exam. They could have set time aside to coach and assist those challenged. They did not have to sacrifice their integrity by sharing the answers on a learning course that stressed the importance of doing the right thing and acting with integrity.

For CVS Health’s corporate social responsibility initiative, Health Zones, CVS understands that healthcare costs and availability have a huge impact on societal outcomes. Their commitment to creating fair and equal access to housing, education, food, employment, transportation, and health care is a move to cea a better tomorrow for those who can participate. However, as health care insurers, they also understand that by creating a healthier society, they stand to not only deliver to society but to deliver moral and financial rewards to their stockholders.

What are other ways to ensure strong ethical business decisions?

The Dobbs-Frank Wall Street Reform and Consumer Protection Act was a governmental reaction to the financial crisis of 2007-2008. It was passed in 2010, targeting the sectors of the US financial system that were believed to have brought about the crisis: banking, mortgage lenders, and credit rating agencies (Hayes, 2022). The law aimed at the concerns over the stability of major firms and their liquidation and restructuring abilities. It oversaw these concerns and actions to the Financial Stability Oversight Council and the Orderly Liquidation Authority. It granted the authority the ability to break up banks deemed large or create a systemic risk. The Federal Insurance Office was granted the same power over insurance companies. The Consumer Financial Protection Bureau (CFPB) was created to approach predatory mortgage lending and create a simple understanding for consumers regarding mortgages. The CFBP also has oversight of credit and debit cards. It created regulations called the Volcker Rule prohibiting banks from certain investment activities, such as hedge funds ad private equity funds. Next, it targeted credit rating agencies by creating the Office of Credit Ratings within the Securities and Exchange Commission (SEC) to ensure that these agencies provided meaningful and reliable ratings. Finally, it granted more teeth to the whistleblowing program created by the Sarbanes-Oxley Act of 2002 by establishing a mandatory bounty program that rewarded whistleblowers with 10%-30% of proceeds from litigation settlements.

The Act was created to ensure that individuals and corporations acted ethically in their financial roles and treated consumers fairly. I think that parts of the Act promote ethical behavior and protect the rights of consumers, ensuring that they are not misled in making financial decisions that could eventually negatively impact them. I do question the whistleblowing part of the Act. Not that whistleblowers do not desire protection, but the Act of paying them to report directly to the SEC. This could affect the integrity of an employer’s internal compliance system, putting the organization at risk without allowing them to act on any whistleblower information.

References

Beal, B. D. (2013). Corporate social responsibility: Definition, core issues, and recent developments (1st ed.) [E-book]. SAGE Publications. Retrieved July 14, 2022, from https://ebookcentral.proquest.com/lib/ashford-ebooks/detail.action?docID=1921123

CVS Health. (2022, March 1). CVS Health invested $185 million in affordable housing in 2021 to advance health equity in underserved communities. Retrieved July 14, 2022, from https://www.cvshealth.com/news-and-insights/press-releases/cvs-health-invested-185-million- in-affordable-housing-in-2021-to

Hayes, A. (2022, February 7). Dodd-Frank wall street reform and consumer protection act. Investopedia. Retrieved July 14, 2022, from https://www.investopedia.com/terms/d/dodd- frank-financial-regulatory-reform-bill. asp

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Question

Before beginning work on this discussion forum, read the following sections of Chapter 1: The Goals and Activities in the Foundations of Financial Management textbook:

Ethical behavior

Risk Management and a Review of the Financial Crisis
Corporate Governance
Goals of Financial Management

In addition, read the articles listed here:

Initial Response:

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, 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. Note: When possible, select a different example than those already posted by a classmate.
Next, explain each ethical example, what might have been done differently, and 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?

Your initial response should be a minimum of 200 words. Graduate school students need to learn how to assess the perspectives of several scholars. Support your response with at least one scholarly or credible resource besides the text.

Ethical behavior