The
demise of Enron, Arthur Andersen, WorldCom, and other
former high flyers and the ensuing lack of investor confidence
resulted in a new emphasis on the need for ethics and
integrity in the executive suite and the boardroom as
well as renewed calls for directors who are independent
both in fact and in appearance. This paper analyzes the
Business Roundtable’s May 2002 White Paper, “Principles
of Corporate Governance,” in which this group of top CEOs
calls on directors to select an ethical CEO and ensure
that the corporation is operated in an ethical manner.
The paper argues that exhorting directors and managers
to be ethical is not enough and challenges the assumption
that directors are required to maximize shareholder value
even if doing so violates the director’s own sense of
personal ethics. The paper presents a decision tree that
directors and managers can use to decide whether an action
would be ethical, then calls on academics, business leaders,
community leaders, labor groups, environmentalists, and
politicians to articulate a list of the values that most
people, both in and outside the corporate world, would
consider important in a capitalist free enterprise system.
Finally, the paper argues that business schools can and
should teach executives and future managers how to engage
in moral reasoning, which requires the decision maker
to take commonly shared values into account and balance
them against each other when acting on behalf of a corporation.
EM
17 pages
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