Key Terms
Shareholders
Owners/stockholders only. Small group.
Stakeholders
Everyone with a vested interest in the business. Larger group that includes:
Shareholder Primacy Doctrine
The old view. Only shareholder profits matter.
Modern view
CEOs must consider ALL stakeholders when making key decisions. The Business Roundtable (major US CEOs) formally endorsed
Legal compliance
Mandatory. Violate it and face civil or criminal penalties.
Ethics
Standards of behavior held in professional and personal life.
Business ethics
Conduct by which companies abide by the law and respect stakeholder rights.
Morals
Used interchangeably with ethics in this chapter. An ethical person = a moral person.
Integrity
Unity between what you say and what you do.
Code of ethics/code of conduct
A guide for behavior. Can be personal, organizational, or profession-based (CPAs, attorneys, CFPs all have professional
Moral compass
Internalized, habitual ability to differentiate right from wrong without struggle.
Truthfulness
Dealing in facts and evidence; foundation for fairness.
Fairness
Impartial compliance with standards of right and wrong.
Disclosure
Sharing facts transparently so recipients can make informed decisions.
Kantian (duty-based) ethics
Focuses on the intent behind a decision. Is the underlying reason good or bad?