3 Types of Unethical Behavior in a Business
In 2002, Congress passed the Sarbanes-Oxley Act, which established new laws to protect investors against rampant corporate fraud. However, as subsequent events made clear, hearing the law isn't the same as obeying the law. Dozens of possible categories of unethical business conduct exist, but most fall within three broad areas.
The Sarbanes-Oxley Act
Congress passed the Sarbanes-Oxley Act in 2002 in response to public outrage over the corporate scandals that rocked the nation at the time. The overall intent of Sarbanes-Oxley, or SOX, was to protect investors and to make it harder for corporations to get away with financial fraud. SOX applies to all publicly traded companies in the U.S. It requires CEOS and CFOs to sign an attestation that they have read their quarterly and annual reports and personally vouch for their accuracy; requires businesses to establish a code of ethics or explain why they have not; and established the Public Company Accounting Oversight Board, which now regulates auditors and accounting firms.
Mistreating Employees and Other Workers
Many examples exist of unethical corporate conduct toward employees or other workers in the supply chain. Many U.S. corporations used Third World sweatshops to produce their goods; some have even been found to use child labor. Every year, lawsuits are filed against employers who are accused of sexual harassment or discrimination against their employees. Some employers have been sued for threatening or firing whistle-blowers, or employees who point out illegal practices or safety violations in the workplace. Some U.S. businesses use undocumented workers because they can pay them less than minimum wage.
Financial Misconduct and Fraud
Examples of financial misconduct include price-fixing, or an illegal agreement between industry competitors to "fix" the price of a product at an artificially inflated level; physicians who refuse to treat non-insured patients, or perform unnecessary procedures to make more money; tax evasion; tax fraud; and "cooking the books" to make the company look more profitable than it is. Other possibilities include paying unjustifiable salaries and bonuses to top officials regardless of work performance – sometimes in spite of it – and chasing short-term profit by placing investor's money in questionable investments.
Misrepresentation and Falsification
Corporate misrepresentation can take many forms. It can be as simple as a salesman who lies about his company's products, or it can be false or misleading advertising. Misrepresentation can involve a coverup of illegal workplace conditions or transactions; falsified data in a shareholder report; lying to a union about corporate profits; or hiding or denying safety problems with a product. Other examples include corporate board members with conflict of interests, doctors who push the most expensive drugs rather than the most effective ones, and brokers who recommend stocks that they own in an effort to drive up the price.
References
- Tutor 2 U.net: Business Ethics Issues
- Quality Digest; Decline in Ethical Business Behavior; Jeffrey T. Luftig, et al.; March 2009
- Medical News Today; Unethical Business Practices in US Health Care Alarm Physician Leaders; March 2005
- Financial Post; Time to Put Trust and Ethics Back in the Workplace; Ray Williams; August 2011
Writer Bio
Mary Strain's first byline appeared in "Scholastic Scope Magazine" in 1978. She has written continually since then and has been a professional editor since 1994. Her work has appeared in "Seventeen Magazine," "The War Cry," "Young Salvationist," "Fireside Companion," "Leaders for Today" and "Creation Illustrated." She earned her Bachelor of Arts in English from Oglethorpe University in Atlanta.