CORPORATE ETHICS

The role of a corporation in a capitalistic economy is so important that study of business ethics would not be adequate without a look at the moral problems that plague corporate management. The feature of limited liability of the owners of a corporation makes it possible for many people to invest in the corporation by buying shares of stock. However , too many owners (stockholders) of the corporation makes it impossible her all to participate individually in directing the operations of the enterprise .Due to their own business interests as well as other constraints , the board of directors cannot also devote their full-time attention to the management of the business .These people, the executive officers of the of the corporation , are salaried full-time employees .They engage in administrative activities as differtiated from the policy – making and general supervisory work of the board of directors. The board of directors and the executive officers constitute the management of the corporation.

RESPONSIBILITIES OF CORPORATE MANAGEMENT

The board of directors is the trusted of the corporation. The owners have elected them as their representatives in managing the business; they have placed their money in the hands of the board trusting that it will be spent for their common advantage .As the trustees , the board of directors are responsible to spend the money entrusted them wisely and honestly and to distribute the profits equitably among the investors .It is also the obligation of the board of directors to choose capable and honest men – the officers – to run the business subject to their general guidance and direction .In turn , it is the obligation of the officers to carry out their assigned duties with competence and integrity so that the board of directors will not be faulted by the stockholders.

Not all men elected to the position of director loyally carry out their responsibilities. Likewise, it is unfortunate that some executive officers are more interested in filling up their pockets with the stockholder’s money than making money for the stockholders.

PRACTICES OF CORPORATE MANAGEMENT

Corporate management that involve ethical considerations: A.)Practices of the board of directors B.) Practices of executive officers .

PRACTICES OF THE BOARD OF DIRECTORS

1. Plain Graft Members of the board of directors help themselves to the earnings that

otherwise would go to other stockholders.

They also manipulated the earning of the corporation and route them to the class of stock dividend for class B common shares where their holdings are insignificant but voting both a stock dividend and a cash dividend to class A common shares where their shares would its substantial.

2. Disloyal Selling It’s a corporate practice that involves conflict of interest. And it happens when this

percent is compelled to decide which of the two corporation integrates he is under obligation to protect.

3. Insider trading It occurs when a broker or another person with the confidential information uses

that information to trade its seeks and securities, thus giving him an unfair advantage over the general public which has not had access to that information.

4. Routing Purchases through director’s pockets The board of directors of company A creates it separate corporation (Company B)

where they are the controlling stockholders. Company B sells the supplies and materials that company A needs.

This practice is unethical because the profits of other stockholders would be corresponding reduced with the extra amount paid in excess of the normal market prices.

5. Negligence of Duty A failure of the member of the Board of Directors more common than breach of

trust is neglect of duties they have been elected for, that is to attend the board meetings regularly. It is only in regular attendance that they can protect the rights and interests of the stockholders. If they do not attend meetings, they betray the trust that the stockholders placed on them.

Practices of Executive Officers

To a lesser extent, executive officers are also guilty of unethical practices. All the unethical practices of the members of the Board of Directors discussed are activities they are also capable of engaging in though perhaps to a lesser degree because of certain limits to their authority.

1. Claiming a vacation trip to be a business trip. The President or a Vice President reports his vacation in Europe or in the United States as a business trip so he can got reimbursement for his expenses.

2. Having employees do work unrelated to the business. Executive officers and lesser managers ask company employees to do personal things for them on company time

such as having the maintenance men do house or appliance repairs for them, and having subordinate employees secure a license or type letters pertaining to their other businesses.

3. Loose or ineffective controls. Managers do not provide adequate controls to remove temptation and to prevent or discourage employees from engaging in unethical practices. A manager has the moral obligation to provide the proper control atmosphere so that his subordinates will not be tempted to commit dishonest acts.

4. Unfair Labor practices. The labor code lists the following as unfair labor practices committed by an employer on employees or a group of employees who have organized themselves into a union:a. To interfere with, restrain or coerce employees in the exercise of their right to self-

organization;b. To require as a condition of employment that a person or an employee shall not join

a labor organization or shall withdraw from one to which he belongs,c. To contract out services or functions being performed by union members in the

exercise of their rights to self-organization;d. To initiate, dominate, assist or otherwise interfere with the formation or

administration of any labor organizations, including the giving of financial or other support to it;

e. To discriminate in regard to wages, hours of work, and other terms or conditions of employment in order to encourage membership in any labor organization;

f. To dismiss, discharge, or otherwise prejudice or discriminate against an employee for having given or being about to give testimony under the Labor Code.

g. To violate the duty to bargain collectively as prescribed by the Labor Code;h. To pay negotiation or attorney’s fees to the union or its officers or agents as part of

the settlement of any issue in collective bargaining or any dispute;i. To violate or refuse to comply with voluntary arbitration awards or decisions

relating to the implementation of a collective bargaining agreement;j. To violate a collective bargaining agreement.

5. Making false claims about losses to free themselves from paying the compensation and benefits provided by Law. There are employers who claim non-existent losses so they can be exempted from paying the minimum wage and emergency-cost-of-living allowances required by law.

6. Making employees sign documents showing that they are receiving fully what they are entitled to under the law when in fact they are only receiving a fraction of what they are supposed to get.