Ethics

Ethics

It is no secret that the primary goal of all for-profit companies is to maximize shareholders’ equity. One critical difference that distinguishes companies from each other is how ethical they are in their business practices. Thousands of firms and individuals are investigated for fraudulent activity every year. There are both negative and positive implications in striving for higher profit margins.

The decision makers of a firm are forced to weigh the likelihood of possible consequences verses potential gains from their decisions. Stockbrokers are a classic example of individuals who feel pressure to perform. They may be presented with the opportunity to purchase stock based on insider information. Although this would greatly increase their chances of making a profit, it is unethical and should be avoided at all costs.

There are also positive implications with attempting to maximize shareholders’ equity. Keeping with the stockbroker example, traders are going to be more inclined to be ethical and make well-researched investments if they know their actions are easily identified and they will be held accountable for wrong doings.

Individuals learn morals and values at a very young age. Parental guidance is the number one factor in shaping a child’s future. Children who are raised to cheat and steal are much more likely to commit crimes and go to jail. For this reason, I don’t think it helps to teach ethics in college. Kids have already made up their mind by then and professors are not going to say anything to alter their future decisions. However, I don’t think it would hurt to discuss previous cases to show students that people do get caught and the risk is far greater than the potential rewards.

A Binghamton Alumni, Stanislav Shpigelman, was arrested on April 11, 2006 for his involvement in an insider-trading scandal. Shpigelman was working as an investment-banking analyst for Merrill Lynch & Co. at the time of the arrest. He provided inside information to Eugene Plotkin and David Pajcin regarding Adidas’ acquisition of Reebok (Department of Justice). Plotkin and Pajcin went on to set up an account under the name Sonja Anticevic, and purchased approximately $130,000 worth of call options. Immediately following the announcement