Presentation on Ethics in Business and Society

Prepared by L. Murphy Smith

Professor of Accounting
Texas A&M University

For permission to use or adapt

this presentation, please contact
Dr. Smith, Lmsmith@tamu.edu
 Ethics:
What’s the
Fuss?
What is your highest aspiration?

A. Wealth
B. Fame
C. Knowledge
D. Popularity
E. Integrity
If integrity is second to any of
the alternatives, then it is
subject to sacrifice in situations
where a choice must be made.
Such situations will inevitably
occur in every person’s life.
 ETHICS
• A branch of philosophy that is concerned
with human character and conduct.

• Dictionary meaning: ethics are principles

of conduct governing an individual group.

• Differentiating good from bad, right from

wrong.
 Why talk about ethics?

Why talk about ethics? In the aftermath of major

corporate failures and questionable accounting

practices, American Accounting Association

President G. Peter Wilson said that in the classroom,

educators need to increasingly emphasize the value of

integrity, what has long been a mainstay of

 In a recent Wall Street Journal
article, Psychology
professor Steven Davis says
that cheating by high school students
has increased from about 20 percent
in the 1940’s to 75
percent today.
“Students say cheating in high school is
for grades, cheating in college is for a
career.”
If students lack ethics in high school and
college,
they lack ethics in their careers too.
Greed and over-reaching ambition often
end in disastrous personal consequences.

Convicted inside trader, Dennis Levine, in

a Fortune magazine article wrote:
“I have painful memories of Sarah learning

to walk in a prison visiting room, and of

Adam pleading with a guard who

wouldn’t let him bring in a Mickey

Mouse coloring book.”

Many institutions of higher education have
instituted policies regarding ethics
education.

For example, the Faculty Handbook of the

Mays Business School at Texas A&M
University includes the following statement:
• “Therefore, faculty and staff have a

responsibility for creating an academic

environment that promotes honest

academic inquiry and teaches students

ethical behavior in the process.”

 Educational Institutions
have established ethics
codes for their students,
e.g. the U.S. Air Force
Academy:

"We Will Not Lie, Steal Or Cheat, Nor

Tolerate Among Us Anyone Who Does"
-- Which do you think is the harder part:
Line 1 or Line 2? Why?
What do profs think?
In a survey of college faculty, 187 professors
responded to several statements about teaching
ethics:
1. The importance of ethics and personal integrity
should be stressed in the courses I teach.
4.75
2. The basis for ethics and personal integrity
should be discussed (e.g. benefit to society as a
whole, moral and religious foundations of
society, etc.)
4.11
Note: Scores are based on a scale from
1: Strongly Disagree to 5: Strongly Agree
American Institute of CPAs Code of
Professional Conduct, Principles
Article I:
In carrying out their responsibilities as
professionals, members should exercise
sensitive professional and moral
judgments in all their activities.
 Is there an ethics crisis in
America?
One recent national election day poll
indicated that 56 percent of voters
thought that America’s problems are
“primarily moral and social.” Only 36
percent thought that the nation’s
problems were “primarily economic.”
 Can ethics be
taught?
Teddy
Roosevelt
said, “To
educate a
person in
mind and not
in morals is to
educate a
menace to
society.”
 In his best-seller, The Closing of the
American Mind, Allan Bloom says that
the eternal conflict between good and evil
has been replaced with “I’m okay, you’re
okay.”
Students unthinkingly embrace a blind
tolerance in which they consider it
“moral” never to think they are right
because that mean someone else is wrong.
More than 200 years ago, Professor Alexander
Tyler wrote of the Athenian Republic, which
had fallen 2,000 years earlier:

“A democracy cannot exist as a

permanent form of government…
• The average age of the world’s greatest civilizations
has been 200 years.
• These nations have progressed through this
sequence:
• From bondage to spiritual faith,
• to great courage,
• to abundance,
• to selfishness,
• to complacency,
• to apathy,
• to dependency, and back again to bondage.”
“In the quest for educational
reform, we would do well to
turn not only to the great books,
but the great exemplars of
wisdom with which our country
is blessed.
• To help reclaim our
destiny as human beings and
citizens, we need to
rediscover the generation that really can
claim to be the best and the brightest in
American history, at least from the moral
and political point of view: the founders of
the American Republic.”
• --Professor C.R. Kesler
Whereas it is the duty of
all nations to
acknowledge the
providence of Almighty
God, to obey His will, to
be grateful for His
benefits, and humbly to
implore His protection
and favor.

George Washington’s
Thanksgiving
Proclamation of 1789
 Of all the dispositions
and habits which lead
to political prosperity,
religion and morality
are indispensable
supports… Reason and
experience both forbid
us to expect that
national morality can
prevail in the exclusion
of religious principle.

George Washington’s Farewell

Address, September 17, 1796
 U.S. Declaration of
Independence
The second paragraph of
America's founding document
states:
"We hold these truths to be
self‑evident, that all men are
created equal, that they are
endowed by their Creator with
certain unalienable rights, that
among these are life, liberty
and the pursuit of happiness."
Where Do We Start?
Upon What Can We
Agree?
 Whether we
derive a code of
ethics from
religious beliefs, a
study of history
and literature, or
personal
experience and
observation: We
can all agree
upon some basic
values.
 In an issue of Management Accounting,
James Brackner stated: The universities are
responding with an increased emphasis on
ethical training for decision making. For the
most part, however, they ignore the teaching
of values. For moral or ethical education to
have meaning there must be agreement on
the values that are considered “right.”
Be sure you are
right, then go
ahead.
Davy Crockett
1786-1836
A nation or a culture
cannot endure for long
unless it is undergirded
by common values such
as valor, public
spiritedness, respect for
others and for the
law; It cannot stand unless it is populated by
people who will act on the motives superior to
their own immediate interest.
Chuck Colson, Against the Night
When the situation
needs improvement,
Gandhi offers
guidance: “You must
be the change you
wish to see in the
world.”
Michael Josephson, in Chapter 1 of
Ethical Issues in the Practice of
Accounting, describes the

“Ten Universal Values:

• Honesty,
• integrity,
• promise keeping,
• fidelity,
• fairness,
caring,
respect for others,
citizenship,
pursuit of excellence,
and accountability.”
“Until about 50 years ago, it was commonly
accepted that universities were to provide
students not only with knowledge and skills,
but also moral guidance based on the
essentials of the Western tradition.”
Business Prof Geoffrey Lantos
 If we want to
produce people
who share the
values of a
democratic
culture, they
must be taught
those values
and not be left
to acquire
them by
chance.
Cal Thomas, The
Death of Ethics in
America
Can you make
a difference?
 “To sin by silence when they should
protest makes cowards of men.”
Abraham Lincoln

Do you think this relates to line 2 of the

U.S.A.F. Academy Code of Honor?
“To see what is
right and not to
do it is want of
courage.”
(Confucius)
‘The right way is not
always the popular and
easy way. Standing for
right when it is unpopular
is a true test of moral
character.’
- Margaret Chase
Smith, first woman
elected to both houses of
the U.S. Congress
“Leadership is a potent
combination of
strategy and character.
But if you must be
without one, be
without strategy.”
General H. Norman
Schwarzkopf
The reputation of a thousand years may be
determined by the conduct of one hour.
Japanese proverb
At a Congressional Hearing
on Accounting and Business
Ethics, distinguished
entrepreneur, Truett Cathy,
the Founder of Chick-Fil-A,
quoted Solomon– "A good
name is more desirable than
great riches; to be esteemed
is better than silver or
gold."
 
The truth is that fame and
fortune are nothing
compared to personal
honor.
President
Lincoln
said:
Honor is
better
than
honors.