Running head Business ethics an Example of the Topic Business Essays by

Running head: Business ethics Abstract. With the rise and growth of capitalism as a mode of production, and the push for profit maximisation, businesses have surged forward into the corporate world with an aim of minimising expenses ( such as the cost of labour, and the operational costs ), while at the same time, maximising the profit. The above state of affairs has led to the massive cases of exploitation of citizens by the commercial world, leading also to the need to enforce business ethics. In particular, there have been cases of fraud which in turn resulted to massive collapse of renown firms such as Tyco International, Enron, WorldCom, Peregrine Systems and Adelphia. It is this state of affairs that led to the creation of the Sarbanes- Oaxley 2002 Act so as to bring in ameliorations into this tumultuous state of developments geared by human avarice. Need essay sample on "Running head: Business ethics" topic? We will write a custom essay sample specifically for you Proceed Students Very Often Tell EssayLab professionals:How much do I have to pay someone to make my assignment today?Specialists advise: Essaylab.Com Offers A Top-Quality Academic EssayBuy Essays Online Write My Essay For Me Grab My Essay Review University Essay Writing Service However, with the enforcement of the business ethics and the Sarbanes- Oaxley 2002 Act, critics have emerged, citing the side effects of carrying out these stipulations. It is against this backdrop that this research paper has been written, with the principal aim of demonstrating how the pitfalls pointed out by critics can be sealed off, so that the Sarbanes- Oaxley 2002 Act can become more effective. Introduction. The Sarbanes- Oaxley 2002 Act which is also known as the Public Accounting, Auditing and Investor Protection Act, the SOX or the Sarbox Acts was enacted in the Federal Law of the United States on 30th July 2002 as a response to the preponderance in the corporate and accounting scandals. Some of the firms that had been affected included Tyco International, Enron, Worldcom, Peregrine Systems and Adelphia. The scandals were so severe in effect, to an extent that billions of dollars of share prices were forfeited, leading to the collapse of these companies and the subsequent dissipation of the national confidence in security markets. The Act was named after its sponsors, Senator Paul Sarbanes and Representative Oxley G. Michael, after that the Act was approved by a 423- 3 vote in the House and 99- 0 in the Senate. This development was followed by George Bush signing the bill into law, and thereby ratifying the most comprehensive American business reforms ever since the times of president Franklin D. Roosevelt. The Act operates by establishing new and quasi- public agencies such as the Public Oversight Board for Accounting Companies (PCAOB) which is given the mandate of supervising, inspecting, regulating and disciplining all the accounting firms that assume the role of auditing the records of accounts for all public companies. The Act also bolsters concepts such as the independence of auditors, internal control assessment, corporate governance and at the same time, enhances the concept of financial disclosure to the public. Research problem statement. Critics such as Ron Paul (a Congressman), have countered that SOX Law was unnecessary due to the fact that it hands the US firms a disadvantage in competing with foreign firms. The critics maintain that the same state of affairs, brought about by the law has been responsible for the driving away of businesses out of the US. Paul in his April 14th 2004 speech in the US House of Representatives, was citing the report by the Wharton Business School's findings. The lucidity of these accusations are bolstered by the fact that research conducted by the Wharton Business School released findings that, ever since the Sarbanes- Oaxley bill was passed into law, American companies have been deregistering from the US Public Stock Exchange. At the same time, it was found that in New York for instance, the New York Stock Exchange had only ten new entrants into the stock market ever since 2004. Ethics statements. This research paper mostly employs the use of academic books that have dealt on the issue of business ethics. At the same time, thoughts that have been borrowed, have been acknowledged so as to both avoid cases of plagiarism (intellectual theft) and uphold the standards of intellectual ethics. All the above measures have been taken to account, in the bid to show clearly the fact that no proper business activities can thrive without the observation of the business ethics. Purpose statements. This research paper seeks mostly to show the need for the observation of business ethics in both the corporate sector and the public sector. This paper does this by analysing the setbacks that bedevil these sectors as a result of not observing business ethics. The research paper does this by analysing the Sarbanes- Oaxley Act under the context of the US. Thoughts on how to seal the loopholes so as to fully realize the benevolence of observing of business ethics are discussed also. Significance. This paper can be deemed as relevant due to the fact that it spells out the pros and cons of adopting business ethics (in this case, the Sarbanes- Oaxley Act) by delving into the American context. This is not an end to itself since this research paper does this, while espousing the dominant aim of encouraging the observation of Sarbanes- Oaxley Act as a form of business ethics. The fine tuning of the Sarbanes- Oaxley Act's modalities have also been dealt on, so as to avoid the inconsistencies and the misgivings that critics have towards the adoption of Sarbanes- Oaxley Act as a form of business ethics. CHAPTER 2 Literature review. Studies have been carried out by different authors who all have different opinions about the importance of adopting the Sarbanes- Oaxley Act as a form of business ethics. For instance, the Wharton Business School (Manz, 2003 pp. 75) in its findings from a research that it had conducted in 2006, maintains that the adoption of Sarbanes- Oaxley Act as a form of business ethics has only been instrumental in ushering in plummeted growth and development of the American Stock Market Exchange. The representatives of this school point at the fact that there has been a lot of cases of deregistration of traders in stock market. The Wharton Business School maintains that this trend has been persisting, following the signing into effect, the Sarbanes- Oaxley Act. The Korn- Ferry International in the same wavelength posits that the implementation of Sarbanes- Oaxley Act has only catalyzed the reluctance on the side of small scale businesses from entering the American Stock Market Exchange. Korn- Ferry International points out that this has been due to the fact that 500 companies have been reported to have lost an average of 5.1 million as compliance expense in 2004 alone (De Vay, 2006 pp. 121). In the same vein, Foley and Lardner law firms have as a rejoinder to the above arguments against the adoption of Sarbanes- Oaxley Act pointed out that the Act has only been very instrumental in increasing the expenses of publicly held or owned companies by 130% from the time the law was enacted. Foley and Lardner law firms continue that this state of affairs has also led to giving foreign businesses an edge over local ones, due to the fact that the Sarbanes- Oaxley Act hugely rests its burdens and injunctions on local business firms, compared to the foreign firms. Other economics pundits such as John C. Dvork (Hartman, 2004 pp. 84) also argue that the adoption of Sarbanes- Oaxley Act leads to the stifling of creativity in the field of computer and technology. Dvork continues that this is likely to cause a downturn in the Information Technology sector. Dvork, a technology and computing journalist explains that this was seen in 2005 when the oldest and the most independent user group of IBM announced its speculations of closing down, citing the fact that the policies of Sarbanes- Oaxley Act was constantly exposing it to wasteful dispensation of resources. CHAPTER 3 Approach. This research study activity has been conducted mainly by analysing the scholarly books that have been written on business ethics in relation to the Sarbanes- Oaxley Act, and its underpinnings. Hypothesis. This paper has been written to prove that the adoption of Sarbanes- Oaxley Act as a way of instilling the observation of business ethics is only going to benefit the US. This is to be actualized by showing clearly, both the pros and cons of adopting Sarbanes- Oaxley Act as a form of business ethics. Causative analysis. There are different reasons that stand in the way of effective realization of business ethics. Some of these reasons are: Additional expenses being imposed on the firms. High operational costs especially for the IT firms since subscribing to the injunctions of the Sarbanes- Oaxley Act requires that these firms upgrade their systems. At the same time, these firms are expected to upgrade their systems following the fact that different non IT firms depend on IT systems and controls to implement the stipulations of the Sarbanes- Oaxley Act. The high rate of incursion of foreign business firms at the expense of local businesses due to the fact that the Sarbanes- Oaxley Act stipulations are country specific, applying much pressure on the domestic firms. CHAPTER 3. Goals and expectations. It is expected that the majority of businesses in America are going to do well as a result of having subscribed to the laws of business ethics. This cannot be far from the truth, especially if the measures are taken to seal the loopholes of the Sarbanes- Oaxley Act. At the same time, the citizens are also likely to be well covered from exploitation, upon business ethics and Sarbanes- Oaxley Act being followed fully. Expected outcomes. It is expected that full enforcement of business ethics policies and the fine tuning of the Sarbanes- Oaxley Act will usher in the following accruals: Cases of fraud are likely to take a plunge in the business and corporate sectors in the US. The US business sector is likely to thrive as a result of the above gain. There is likely to be the restoration of public confidence in the American Stock Market Exchange. Growth of the American Stock Exchange Market is inevitable as a result of the restoration of public confidence. CHAPTER 4. Problem statement. There are many problems that are being realised as a result of failure to totally instill the dictates of business ethics upon the business sector and failure to revise the stipulations of the of the Sarbanes- Oaxley Act. Some of these setbacks that are going to be encountered are: the departure of the US borne businesses from the business scene; the unproportional infiltration of foreign businesses into the American scene; and the collapse of the US Stock market. Description of selected solutions and calender plans. There should be the revision of the Title 2 of the Sarbanes- Oaxley Act so that the independence of the auditors should be extended to the private and foreign firms. All private and foreign business entities are to be subjected to the Title 3 of Sarbanes- Oaxley Act of Corporate responsibility. There should be the enhancement of the Title 4 Sarbanes- Oaxley Act of Enhanced financial disclosure. The concept and practice of the Title 5 of Sarbanes- Oaxley Act of Analyst conflict of interest should be also extended so that it pervades the entire corporate world. The Corporate Tax Returns of Sarbanes- Oaxley Act as the Tenth (10th) Title should also be stretched so that all businesses be made subject to its stipulations. CHAPTER 5. Discussions on recommendations. Revision of the Title 2 of the Sarbanes- Oaxley Act. At the present, Title 2 of this Act authorises the independence of the auditors at the public sector alone. However, to ensure that the concept of egalitarianism is followed to the latter, the powers of the auditors must be extended to the private sector and the foreign companies so that these do not have an edge, at the expense of local firms and the public sector in a way that is not warranted or earned. Reviewing of the Sarbanes- Oaxley Act Title 3. This act should be reviewed so that the observation of corporate responsibility be observed by both local and foreign businesses. However, since it is expedient that foreign investors be attracted, it is necessary that foreign businesses be subject to lower or manageable levels of corporate responsibility. Expanding of Title 4 of the Sarbanes- Oaxley Act. Both the public sector and the private sector- including foreign corporations must be made to send their statements of accounts at the end of every financial year for taxation, and for investigative purposes. However, this is only possible if Title 4 of the Sarbanes- Oaxley Act is abrogated. Abrogation of _ Title 5 of the Sarbanes- Oaxley Act. Title 5 of the Sarbanes- Oaxley Act should also be abrogated so that it is not only the officer in a business that belongs to public sector who is barred from holding certain portfolios so as to ward off cases of conflicts of interests in decision making. Businessmen in the private sector and foreign investors should also be subjected to such stipulations since these are also hugely prone to succumbing to conflicts of interests. Reviewing of Title 10 of the Sarbanes- Oaxley Act. As stated in the third recommendation, Title 4 of the Sarbanes- Oaxley Act must be abrogated so that Title 10 of collective taxation of both the private and public, local and foreign investments can be realized. Conclusion. It is now clear that implementing business ethics and specifically, the Sarbanes- Oaxley 2002 Act presents both merits and demerits in the economic sector. For instance, one of the merits is that the American Stock Exchange Market is bound to grow due to the renewed public confidence in the stock market. On the other hand, if not properly checked, the implementation of the Sarbanes- Oaxley 2002 Act as it is presently, will continue to trigger the exit of the US businesses from the American scene. The above matter must be taken as a matter of grave concern by the government since it is likely to lead to the unfavourable preponderance of foreign investments over the local ones. However, since the above state of affairs have been shown to exist as a result of the loopholes in the Sarbanes- Oaxley 2002 Act, the US government must therefore be seen to make strident measures to ratify the above recommendations so as to avert this danger. References. De Vay, D. (2006). Effectiveness of the Sarbanes- Oaxley Act in combating fraud. New York: Prentice Hall. Manz, W. H. (2003). The legislative history of Title 4 of the Sarbanes- Oaxley Act: Corporate fraud _ responsibility. Michigan: Michigan University Press. Hartman, P. L. (2004). Business ethics: collective perspectives. New York: John Wiley and Sons