Business Ethics Essay Example | Topics and Well Written Essays - 1500 words - 5

Business Ethics - Essay Example Besides financial losses for the business, other problems such as lawsuits and market share decrease may be witnessed (Baumhart, R. 1968). Ethical Problems Worldwide Corporate ethical issues have not been confined to the United States. 80% of companies worldwide suffered business fraud in the years between 2004 and 2007. Parmalat, a dairy company in Italy filed for bankruptcy in 2003 because of fraudulent accounting issues. Founder Calisto Tanzi was found guilty of fraud in 2010 and sentenced to prison for eighteen years. The company reported earnings every year but never earned any earnings. Conrad Black, a former chairman of Hollinger International, was found guilty in the 2007 of embezzling funds of the media company’s shareholders by back-dating stock options (Baumhart, R. 1968). Millions of dollars was stolen through falsified documents. In Sweden top management of the insurance business Skandia engaged in corruption awarding themselves large bonuses in excess of $350 mil lion, some of which were never disclosed. This action made Shareholders to be extremely unhappy with the losses and executive corruption. The prices of shares in the company dropped drastically (Helin and Sandstrom2007). The fines levied against investment banks and brokerage firms in 2003 did not stop investment banks such as Lehman Brothers from closure five years later over undervalued mortgage-backed securities. Banks got into a new part of finance that escaped banking rules through bundling bad mortgages into securities (Lewis2010). The United States experienced the largest financial disaster since the great depression was felt around the world. Even though Lehman Brothers assets exceeded $600 billion, it collapsed due to their deep connection with derivatives, this enabled investment banks to shift money from one company to another. The Ethics of U.S. Bankers The ethics of banks have been measured frequently by the Gallup Polls. Though in 1988 polls that was conducted during t he savings and loan crisis, there was a drop in number of people rating the banker’s ethics as high or very high by 12%. There was a further drop from 23 % in the poll taken in 2008 to 19 % in the following year. This was the lowest record for the profession in the banking industry. In 2009 polls, 33 % of respondents rated the ethics of bankers as ‘low or very low’. This indicated a level of distrust and also poor ethics in the US banking industry. From the figures, it is a clear indication that the blame was pointed to the bankers for the financial crises. The public felt that the financial problems were due to bad ethics in the banking sector. Bankers have been criticized for issuing risky loans but according to (Lewis 2010), he argues that it is too crude to blame the financial crisis on ethics of bankers. According to Graafland and van deVen (2011) the three areas where of U.S. government has failed include encouraging the credit extension in the real estate market, failure by the government to keep a strong financial policy, and finally failure to regulate and monitor the markets. According to Graafland and van deVen there should be an improved sense of professionalism and duty to the public is needed. When an organization or industry loses its authenticity, the benefit of doubt is also lost. This is according to Kopeck Berenbeim, R. (1987). The Corruption Perception Index The corruption perception index (CPI) can also be used to