Business Ethics and Corporate Governance: An Analysis

Finance 2
Question 1
Business ethics refers to the morals and ethical principles, which are applied in the business
environment, for the problems raised under it. These relate to the study of proper policies and
practices of business, which guide the manner in which the businesses behave. Through business
ethics, the difference between right and wrong conduct is made (Minus, 2013). The businesses
are scrutinized in order to provide constructive criticism regarding the practices and the rules of
the business organizations. The modern day business ethics can be analysed through the concepts
like corporate social responsibility, which require the businesses to be responsible towards the
stakeholders while earning profits. In use of such concepts, the obligations of the business
towards the stakeholders can be determined, which further helps in clarifying the stance of
business ethics (Shaw, 2013).
The businesses are therefore required to follow certain ethical theories and the themes of such
theories, in order to conduct the business in an ethical manner. Virtue ethics provide the
businesses with the learning of upholding virtues like honesty and integrity in their conduct
(Winter, 2011). The deontological ethics require the business to act in a way which is guided by
the universal principles. There are at times, ethical theories which contrast each other,
particularly the deontological ethics where the action is judged, in comparison to the
consequentialist theories like utilitarianism, where the end results are judged for the actions
(Bykvist, 2010). The business should thus adopt a single approach in all their roles, and follow
the spirit of these theories, in place of finding loopholes and taking advantage of those (Ferrell,
Fraedrich and Ferrell, 2016).

Finance 3
Corporate governance is a crucial concept which is aligned in the modern day business ethics.
This is due to the fact that corporate governance helps the businesses in working towards the
interests of the stakeholders. Corporate governance allows the stakeholders to exercise control on
the corporate managers and in providing direction to the company (Larcker and Tayan, 2015).
Corporate governance can be explained through both narrow and broad perspectives. From the
narrow viewpoint, it relates to the relations between the directors, corporate managers and the
different stakeholders. From a broader viewpoint, it involves a combination of the listing rules,
regulations and laws, generating profit, performing efficiently, meeting the legal and social
expectations, and voluntary practices allowing the company to attract capital (Gregory and
Simms, 2005).
There have been a number of blunders in the recent history which have led to the increased focus
on business ethics and corporate governance. These blunders show, that the failure in upholding
business ethics and corporate governance, results in corporate failures (Plessis, Hargovan and
Bagaric, 2018). WorldCom is amongst the leading examples which are given to show the failures
in upholding business ethics by the ones responsible to run the business of the company (Ashraf,
2011). The main player in the WorldCom fiasco was CEO Bernie Ebbers. From the outside, it
looked like the company was being led by a strong leader. The reality was that the company was
fraudulently reporting its profits as $3 billion, where the truth was that the company had incurred
a half a billion loss (Scharff, 2005). The investigations showed that the assets of the company
had been inflated by $11 million, which resulted in investors losing $180 billion and loss of
30,000 jobs. This led to Ebbers being fired ad sentenced for fraud, and the Sarbanes-Oxley Act