Business Ethics

Reviewing Theory, Rationalizations, Dilemmas and Resolutions

You are an executive with a large pharmaceutical company and you have to decide whether to market a product that might have undesirable side effects for a small percentage of users.  How should you decide whether to sell the product?  Specifically, what are the steps you would employ in reaching your decision?  How does the theory of ethics that is applied affect your answer?  In discussing the theoretical aspect, you must identify and discuss at least 2 relevant theories from this week.

Learning Activity #2

The Pressure to Overstate Stock Valuation

You have been the Chief Financial Officer (CFO) for a large manufacturing company for 15 years. The Company’s year-end is March 31 and you are finishing the year-end accounts.

You have recently been advised by the Chief Operating Officer (COO) of a significant level of slow-moving stock. The stock in question is now more than nine months old and would normally have been written down some months previously.

The shareholders are trying to sell the Company and the Chief Executive Officer (CEO), who is also the majority shareholder, has told you that it is not necessary to write down the stock in the year end accounts. You are sure that the CEO wants the financial statements to carry an inflated stock valuation because he has found a prospective buyer for the Company. The CEO has mentioned to you that if the proposed deal is successful, all employees will keep their jobs and you will receive a substantial pay increase.

What are the ethical implications of this scenario and how would you resolve them? Are there any ethical theories that might support your answer?

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