Q6. CASE STUDY Essay Example
Q6. CASE STUDY
In this case, as a finance director, I am directly faced with the issue related to ethics. Ethics dictate that one should entirely be focused on doing what is deemed to be morally right and good at the eyes of other people or the society in general. It is aimed at living a good life with and for others in just institutions. In this regards, ethics is thus considered to be a fundamental stance for which people yearn to adopt in most, if not all, circumstances affecting their way of life.
According to Knapp et al (2007, p.54), the possible areas of conflicts related to ethics that could also apply in this scenario include; first, the aspect related to remuneration. It is important to note that from the perspective of ethics of business, the pertinent issue does solely focus on the actual degree of remuneration but the manner for which it is determined. Markets operating on rather smooth functionalities are entirely what are needed for ensuring that a worker is paid true and fair compensation packages (Knapp et al, 2007). As long as he market forces are allowed to operate freely, their imminent capacity allows for just and a degree of moral sense since it assists with economic efficiency and thus, each and every worker is able to play their part in improving their welfare. For this case, I do not think writing down and valuing stocks to improve the picture of the overall financial statements will compel me to do what the managing director proposes; improving my compensation package. Secondly, there is the issue related to conflicts of interest, which has an impact at the immediate forefront of economic phase to both individual people and institutions that find themselves torn in between clashing loyalties, motivations and interests (Abdullah & Valentine, 2009). It is crucial to note that these circumstances would mainly arise whenever there is a considerable level of asymmetry of information; and comprehension amongst the parties involved in a given transaction. For this case, as a finance director, I am torn in between being loyal to the managing director and my fellow colleagues by covering up for them or ensuring that I stand my moral ground and possibly prevent the potential buyer from suffering losses in the future. The probable measure behind the decision to improve the stock value affects a greater number of stakeholders in the company given the manipulation stock management techniques will only be done on grounds of selfish assumptions and behaviour on the part of the organisations as well as their imminent management and are thus, sustained by distrust of other players (Abdullah & Valentine, 2009). As a result of this, the outcome leads to unilateral decisions based on individual objectives that would possibly limit the generation of value for all those involved in a transaction including the potential buyer.
In this case, the adoption of unorthodox means to camouflage possible stock value would result to outstanding short-term benefits. Even though this form of engagement will not negative impact the interests of the people directly involved, at least not within the short-term period, it goes way beyond reducing the society’s degree of trust to the underlying finance profession and, also trust amongst potential creditors, lenders and buyers. This is because it implicitly undermines the level of authority of social conventions; allows for possible diversification of resources from operations within the real economy towards financial activities that will not be profitable in the long run; as well as increases the level of risk pertinent with transactions that involve different types of financial assets.
My actions will however; rely on a great number of theories that will for my basis for refusing to do what is being asked of me. Deontology is a theory of ethics that ascertains the individual people should be ready to always adhere to their commitments and responsibilities while being engaged in a process of decisions and especially when the aspect of ethics is in play (Conway & Gawronski, 2013). This basically means that a person should follow their obligations to another individual or society since upholding one’s duty is what is deemed to be ethically correct. For this case, despite my obligations as a finance director being on the managing director, I will surely my consistency in making a decisions that will not only be based on individual’ set duties but what the law of ethics requires. In fact, I will also seek to find out what the utilitarianism proposes in such situations. In a utilitarian point of view, a person’s level of acting ethical rests with their immediate capacity to predict the consequences of an action. To a utilitarian, the decision that should be adhered to would be one that will result to a greater benefit to most of the people. Act utilitarian requires that one engage in an activity that would benefit most people regardless of personal feelings or even societal limitations and expectations such the law (Conway & Gawronski, 2013). However, the rule utilitarianism emphasizes on the aspects of law and fairness. It seeks to ensure an action benefits lots of people but through the fairest and most-justifiable means available.
In this effect, I will thus not engage in accepting the managing propositions since it does not adhere to the justifiable and fairness to the potential buyer and the underlying society as a whole. It is possibly true that even if I agree to the demands, and the business is sold to the potential owner; it is more than certain that the going-concern of its operations will not be a guarantee. It means that the promised remuneration package would only for a short-term as well as the jobs. The new owner could go ahead and file lawsuits that will later results to even more loss for all of us. Thus, it will be paramount to prevent future embarrassment and loss.
Abdullah, H. & Valentine, B., 2009. Fundamental and ethics theories of corporate governance. Middle Eastern Finance and Economics, vol.4, no.4, pp.88-96
Conway, P & Gawronski, B., 2013. Deontological and utilitarian inclinations in moral decision making: a process dissociation approach. Journal of Personality and Social Psychology, vol.104, no.2, p.216
Knapp, S., Gottlieb, M., Berman, J. & Handelsman, M.M., 2007. When laws and ethics collide: What should psychologists do? Professional Psychology: Research and Practice, vol.38, no.1, p.54.
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