Corporate Governance and Ethics: Ethical Theories in Business Context

This case study delves into the realm of corporate governance and ethics, presenting a scenario involving Mr. Goodrich, the COO of a company, and his subordinates, Arnold and Amanda. The case revolves around the discovery of financial mismanagement and Mr. Goodrich's subsequent actions to cover it up, including pressuring his subordinates to comply and remain silent. The assignment analyzes the ethical implications of Mr. Goodrich's behavior, along with the actions of Arnold, through the lenses of three prominent ethical theories: egoism, utilitarianism, and deontology. The analysis explores whether the actions taken were morally justifiable according to each theory, providing rationale for the claims made. The study assesses the choices made by the individuals involved, considering the potential consequences and the principles of self-interest, maximizing overall happiness, and adherence to duty in the context of business ethics. The paper concludes by emphasizing the subjective nature of ethical judgments, highlighting how different ethical frameworks can lead to varying interpretations of what constitutes right or wrong in a given situation.

Running head: CORPORATE GOVERNANCE AND ETHICS
Corporate Governance and Ethics
Student’s name:
University:

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Author’s Note:
Executive summary:
Ethics encompasses all sorts of human conduct. It is the normative science that provides the
necessary principles to define what is right or what is good. In the following paper, three
ethical theories have been described and utilized in practice. The aim of the paper is to
analyse real life human conducts in the light of standard ethical theories. For this purpose, a
hypothetical situation was given where the key personnel found out about certain
mismanagement of funds and reported that to their superior authority. The COO in question
decides to cover up the entire fraudulent activity and forces his subordinates to comply with
his decisions. He even threatens them to ensure their silence. The subordinates, however,
comply apparently. Now, their actions have been analysed under the scrutiny of three ethical
theories, namely egoism, utilitarianism and deontology. The analysis tries to evaluate whether
the actions were right and provides necessary rationale for the respective claims.

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Table of Contents
Introduction................................................................................................................................3
Egoism........................................................................................................................................3
Definition of egoism..............................................................................................................3
Explaining Mr. Goodrich’s behaviour following egoism......................................................4
Utilitarianism..............................................................................................................................4
Definition of Utilitarianism....................................................................................................4
Analysing Mr. Goodrich’s behaviour....................................................................................5
Analysing Arnold’s actions....................................................................................................5
Deontology.................................................................................................................................6
Definition of deontology........................................................................................................6
Analysing Arnold’s action in the light of deontology............................................................6
Conclusion..................................................................................................................................6
References..............................................................................................................................8

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Introduction
Ethics is the moral compass of human conduct. It evaluates the voluntary activities of
a human being residing in a society with reference to rightness or wrongness of the action
(Ciulla, 2014). It also provides with the necessary frameworks and guidelines of what an
individual ‘should’ or ‘should not’ do. (Darwall, 2018)
The scrutiny of ethics encompasses every sort of human conduct (Nuttall, 2013).
Neither business strategies nor organizational practices are beyond its jurisdiction. Moreover,
there is an independent branch of study, namely business ethics that provides the moral
principles to determine how an organization or individual attached to it should behave
(Crane, 2019). It defines what is right and what is wrong in a business, and it always paves
way to make the right choice.
The following paper is a discussion of ethical behaviour in business. In this paper,
theories of ethics will be analysed and interpreted in the context of a given situation. The case
study involves three individuals, Mr Goodrich, the COO of the company along with Arnold,
the management accountant and Amanda, the HR manager. While reporting a debacle of
accounts and company fund, the reactions and consequences of those individuals will be
analysed in the light of egoism, utilitarianism and deontology respectively.
Egoism
Definition of egoism
Egoism can be defined as the ethical standpoint that upholds self-interest as the
central focus of human motivation (Stanford Encyclopedia of Philosophy). To elucidate,
egoism maintains that human beings are essentially self-centred and acts on the grounds of

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the self-interest. The roots of egoism can be found in the writings of philosopher Thomas
Hobbes and Macauley (Broad, 2014). In his famous work Leviathan, Hobbes opines that “No
man giveth but with intention of good to himself; because gift is voluntary; and of all
voluntary acts the object to every man is his own pleasure” (Hobbes, 2016). Hence, following
egoism, whatever serves the purpose of self-gratification is deemed right.
Explaining Mr. Goodrich’s behaviour following egoism
Mr. Goodrich is a person who has worked carefully to create a persona of significance
and of power. He will leave no stone unturned to establish his authority over the company.
However, the debacle has left him in a vulnerable position. If the information becomes
known to others, his position as the COO will be at threat. Besides, it is claimed by Amanda
that this debacle is mostly caused by Mr. Goodrich’s own nephew, which is another strike to
his reputation. Moreover,this mismanagement will render the company on the verge of
insolvency. In both cases, it is a loss-loss situation for Mr Goodrich.
In the present scenario, he is presented with an ethical dilemma whether or not to
make the information public, where he chooses to keep silent. In the light of egoism, Mr.
Goodrich has done the right job as he has acted out of pure self-interest and ensured his
personal benefit. However, the question remains, whether this is harmful for other.
Utilitarianism
Definition of Utilitarianism
The theory of Utilitarianism promotes the concept of maximum happiness for the
maximum number of people (Broad, 2014). Propounded by philosophers such as Jeremy
Bentham and John Stuart Mill, Utilitarianism asserts that the human conduct can be right or
wrong based on the amount of welfare or happiness it brings to people and consequentially

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rejects actions that cause harm or unhappiness (Stanford Encyclopedia of Philosophy). As
contrasted to egoism, utilitarianism talks of greater good.
Analysing Mr. Goodrich’s behaviour
The situation portrayed in the case study presents an ethical dilemma for Mr.
Goodrich, for there is clearly two options present to him. On one hand, he can inform the
concerned people about the mismanagement and take necessary actions to compensate the
employees properly. However, this will come at the cost of his loss of reputation and
authority. On the other hand, he can cover up the whole incident and go with the flow,
although this will deprive the employees of their rightful compensation.
Mr. Goodrich’s action in the light of utilitarianism will be regarded as wrong or
immoral, as it does not serve the purpose of welfare of the majority, instead it serves his own
purpose. More specifically, the action renders more unhappiness than welfare. Not only he
forces the employees to give up their rightful earning, he also forces Amanda to leave her job
as well as Arnold to go through a hard time in cooperating in the fraud against his will.
Contrary to this argument, Mr. Goodrich’s action can be deemed right as well. If the
company announces insolvency, all the employees including himself and Arnold will lose
their job. This will create more distress rather than just giving up an amount of the
compensation. Hence, considering the greater good, Mr. Goodrich has done the right thing.
Analysing Arnold’s actions
From the ethical perspective, Arnold too faced the dilemma of whether or not to
announce the information to the competent authority. However, in his instinctive action,
Arnold has hoped that Mr. Goodrich would act focusing on the greater good. He himself
proposes to announce the mismanagement as well and hopes that the confession will buy

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them time to recover. However, it was beyond his authority to cross his supervisor, although
he made the right decision in terms of the greater benefit of people.
Deontology
Definition of deontology
The term Deontology is derived from Greek ‘deon’ meaning obligation or duty
(Misselbrook, 2013). As propounded by philosopher Immanuel Kant, deontology remains a
form of normative principle that asserts “duty for duty’s sake” (Broad, 2014). It suggests that
human action should not be evaluated on the basis of its consequence; rather it should be
deemed right or wrong based on their compliance to duty. (Stanford Encyclopedia of
Philosophy)
Analysing Arnold’s action in the light of deontology
As deontology suggests, one must act out of his duty or obligation instead of
evaluating the consequence of the action. In this case, Arnold’s duty is to obey his superior
Mr. Goodrich and follow his order. The consequence of the cover up certainly will deprive
the employees of their rights. However, to comply with his professional obligation, Arnold
cannot but follow Mr. Goodrich’s orders. In this context, Arnold has done the right thing by
handing over all the files and keeping all this to himself.
Conclusion
Ethical judgements of human actions are based on the various interpretation of
rightness or goodness. Every theory has its own notion of what is good or what is right. As is
seen in the discussion above, the individuals’ actions are referred as right or wrong following
the basic interpretation of respective theories. Hence, there is nothing absolute right or
absolute good as such. It is all matters of perception.

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References
Broad, C. D. (2014). Five types of ethical theory. Routledge.
Ciulla, J. B. (Ed.). (2014). Ethics, the heart of leadership. ABC-CLIO.
Crane, A., Matten, D., Glozer, S., & Spence, L. (2019). Business ethics: Managing corporate
citizenship and sustainability in the age of globalization. Oxford University Press.
Darwall, S. (2018). Philosophical Ethics: An Historical and Contemporary Introduction.
Routledge.
Deontological Ethics (Stanford Encyclopedia of Philosophy). (2019). Retrieved 26 August
2019, from https://plato.stanford.edu/entries/ethics-deontological/
Egoism (Stanford Encyclopedia of Philosophy). (2019). Retrieved 26 August 2019, from
https://plato.stanford.edu/entries/egoism/
Hobbes, T. (2016). Thomas Hobbes: Leviathan (Longman Library of Primary Sources in
Philosophy). Routledge.
Misselbrook, D. (2013). Duty, Kant, and deontology. Br J Gen Pract, 63(609), 211-211.
Nuttall, J. (2013). Moral questions: an introduction to ethics. John Wiley & Sons.
The History of Utilitarianism (Stanford Encyclopedia of Philosophy). (2019). Retrieved 26
August 2019, from https://plato.stanford.edu/entries/utilitarianism-history