CORPORATE ETHICS

The role of a corporation in a capitalistic economy is so important that study of

business ethics would not be adequate without a look at the moral problems that
plague corporate management. The feature of limited liability of the owners of a
corporation makes it possible for many people to invest in the corporation by buying
shares of stock. However , too many owners (stockholders) of the corporation
makes it impossible her all to participate individually in directing the operations of
the enterprise .Due to their own business interests as well as other constraints , the
board of directors cannot also devote their full-time attention to the management of
the business .These people, the executive officers of the of the corporation , are
salaried full-time employees .They engage in administrative activities as differtiated
from the policy making and general supervisory work of the board of directors.
The board of directors and the executive officers constitute the management of the
corporation.

RESPONSIBILITIES OF CORPORATE MANAGEMENT

The board of directors is the trusted of the corporation. The owners have
elected them as their representatives in managing the business; they have placed
their money in the hands of the board trusting that it will be spent for their common
advantage .As the trustees , the board of directors are responsible to spend the
money entrusted them wisely and honestly and to distribute the profits equitably
among the investors .It is also the obligation of the board of directors to choose
capable and honest men the officers to run the business subject to their general
guidance and direction .In turn , it is the obligation of the officers to carry out their
assigned duties with competence and integrity so that the board of directors will not
be faulted by the stockholders.
Not all men elected to the position of director loyally carry out their
responsibilities. Likewise, it is unfortunate that some executive officers are more
interested in filling up their pockets with the stockholders money than making
money for the stockholders.

PRACTICES OF CORPORATE MANAGEMENT

Corporate management that involve ethical considerations: A.)Practices of
the board of directors B.) Practices of executive officers .

PRACTICES OF THE BOARD OF DIRECTORS

1. Plain Graft
Members of the board of directors help themselves to the
earnings that otherwise would go to other stockholders.
They also manipulated the earning of the corporation and route
them to the class of stock dividend for class B common shares
where their holdings are insignificant but voting both a stock
dividend and a cash dividend to class A common shares where
their shares would its substantial.

2. Disloyal Selling
Its a corporate practice that involves conflict of interest. And it
happens when this percent is compelled to decide which of the two
corporation integrates he is under obligation to protect.
3. Insider trading
It occurs when a broker or another person with the confidential
information uses that information to trade its seeks and securities,
thus giving him an unfair advantage over the general public which
has not had access to that information.
4. Routing Purchases through directors pockets
The board of directors of company A creates it separate corporation
(Company B) where they are the controlling stockholders. Company
B sells the supplies and materials that company A needs.
This practice is unethical because the profits of other stockholders
would be corresponding reduced with the extra amount paid in
excess of the normal market prices.
5. Negligence of Duty
A failure of the member of the Board of Directors more common
than breach of trust is neglect of duties they have been elected for,
that is to attend the board meetings regularly. It is only in regular
attendance that they can protect the rights and interests of the
stockholders. If they do not attend meetings, they betray the trust
that the stockholders placed on them.

Practices of Executive Officers

To a lesser extent, executive officers are also guilty of unethical practices. All
the unethical practices of the members of the Board of Directors discussed are
activities they are also capable of engaging in though perhaps to a lesser degree
because of certain limits to their authority.

1. Claiming a vacation trip to be a business trip. The President or a Vice

President reports his vacation in Europe or in the United States as a
business trip so he can got reimbursement for his expenses.
2. Having employees do work unrelated to the business. Executive
officers and lesser managers ask company employees to do personal
things for them on company time such as having the maintenance men
do house or appliance repairs for them, and having subordinate
employees secure a license or type letters pertaining to their other
businesses.
3. Loose or ineffective controls. Managers do not provide adequate
controls to remove temptation and to prevent or discourage employees
from engaging in unethical practices. A manager has the moral
obligation to provide the proper control atmosphere so that his
subordinates will not be tempted to commit dishonest acts.
4. Unfair Labor practices. The labor code lists the following as unfair labor
practices committed by an employer on employees or a group of
employees who have organized themselves into a union:
a. To interfere with, restrain or coerce employees in the exercise of
their right to self-organization;
b. To require as a condition of employment that a person or an
employee shall not join a labor organization or shall withdraw from
one to which he belongs,
c. To contract out services or functions being performed by union
members in the exercise of their rights to self-organization;
d. To initiate, dominate, assist or otherwise interfere with the
formation or administration of any labor organizations, including the
giving of financial or other support to it;
e. To discriminate in regard to wages, hours of work, and other terms
or conditions of employment in order to encourage membership in
any labor organization;
f. To dismiss, discharge, or otherwise prejudice or discriminate against
an employee for having given or being about to give testimony
under the Labor Code.
g. To violate the duty to bargain collectively as prescribed by the
Labor Code;
h. To pay negotiation or attorneys fees to the union or its officers or
agents as part of the settlement of any issue in collective
bargaining or any dispute;
i. To violate or refuse to comply with voluntary arbitration awards or
decisions relating to the implementation of a collective bargaining
agreement;
j. To violate a collective bargaining agreement.
5. Making false claims about losses to free themselves from paying the
compensation and benefits provided by Law. There are employers who
claim non-existent losses so they can be exempted from paying the

minimum wage and emergency-cost-of-living allowances required by

law.
6. Making employees sign documents showing that they are receiving
fully what they are entitled to under the law when in fact they are only
receiving a fraction of what they are supposed to get.