Business & Professional Ethics
for Directors, Executives &
Accountants, 8e
Leonard J. Brooks and Paul Dunn
Cengage Learning, Boston, MA, 2018
Chapter 1 – Ethics Expectations
Chapter Questions and Case Solutions
Chapter Questions…………………………………………………………2
Case Solutions……………………………………………………………….5
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Chapter Questions
1. Why have concerns over pollution become so important for management and directors?
Because the public perceive that our environment is finite and that our well-being is threatened.
will be seen by stakeholders with negative consequences in consumer and capital markets.
2. Why are we more concerned now than our parents were about fair treatment of employees?
3. What could professional accountants have done to prevent the development of the credibility gap
and the expectations gap?
4. Why might ethical corporate behavior lead to higher profitability?
Because attention to ethical concerns can keep corporations out of costly problems such as
5. Why is it important for the clients of professional accountants to be ethical?
Because auditors don’t check 100% of all transactions and, even if they did, there would be
6. How can corporations ensure that their employees behave ethically?
By developing ethical corporate cultures based on codes of conduct to provide guidance;
7. Should executives and directors be sent to jail for the acts of their corporation’s employees?
Yes, they should, if the executives and directors act negligently or without engaging in due
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8. Why are the expectations of a corporation’s stakeholders important to the reputation of the
corporation and to its profitability?
Without the support of key or primary stakeholders such as customers and employees,
9. How can a corporation show respect for its stakeholders?
10. How can conflicts between the interests of stakeholders be resolved by a corporation’s
management?
By displaying sensitivity to each side, ranking the interests involved and using this ranking to
11. Why are philosophical approaches to ethical decision making relevant to modern corporations and
professional accountants?
The philosophical approaches to ethical decision making (utilitarianism, deontology, and virtue
12. What are the common elements of the three approaches to ethical decision making that are briefly
outlined in the chapter?
13. Is a professional accountant a businessperson pursuing profit or a fiduciary that is to act in the
public interest?
Both, but when there is a conflict between these roles, the professional accountant must place
is the primary goal of a professional – see later chapters, particularly Chapter 6 for discussion).
14. Why is it important for a professional accountant to understand the ethical trends discussed in this
chapter?
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15. Why should a professional accountant be aware of the Ethics Code of the International Federation
of Accountants (IFAC)?
Because the IFAC Code is the newly defined standard to which all IFAC member organizations,
16. Why is an ethical corporate culture important?
An ethical corporate culture—also called a culture of integrity—is one in which ethical behavior
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Case Solutions
Cases Involving Improper Behavior
1. Selling Only Sugary Drinks (Chapter 1, page 33)
What this case has to offer
This case looks at actions that might be legal, but not ethical; individual rights versus the common good;
Teaching suggestions
I find it useful to start off by asking if the class members were surprised to learn how much sugar is in
normally consumed sizes of sugary drinks. That raises awareness and I go on to explore the relationship
to diabetes and obesity problems, and the growing concern for each. I then ask what the ethical issues
are in the case which leads to the following.
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Discussion of ethical issues
1. Why do you think that the doughnut chain continued to sell only sugary soft drinks even though it
was under pressure to sell diet soft drinks as well?
The profit margin on sugary drinks increases with the size of the beverage, because drinks are
made by adding water to syrup. The marginal cost of a larger sugary drink is small, so the profit
is greater for the larger drink, and the business’s owners and/or shareholders need profitability.
2. Was selling only sugary soft drinks ethical?
Consider the questions of self-interest (the doughnut chain’s) versus the common interest (its
consumers’ health; health problems and societal costs associated with excessive sugar
consumption) and consumer feedback (desire for other beverages). It seems that the chain
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3. Should the university campus officials have forced the doughnut chain to carry diet soft drinks?
Yes, if they want to take an ethical stance and protect their students. However, the university’s
power to force the doughnut chain to change its product offerings may be limited unless the
Useful Articles, Links, and Videos
“Pepsi gets aggressive on cutting sugar,” Alanna Petroff (October 17, 2016), CNN Money,
that “…two–thirds of [Pepsi’s] single serving drinks will have 100 or fewer calories by 2025 as it
cuts back on sugar. Currently [2016], less than 40% of its drinks have 100 calories or fewer.” In
addition, the company says it will reduce saturated fat and sodium in its snack products.]
“Food for thought: Food companies play an ambivalent part in the fight against flab.” (December 15,
2012). Economist,
and fast-food chains to improve their offerings while still satisfying shareholders. Given their
intentions, how have those companies performed?]
“Introduce sugar tax, ban food and drink ads for kids: Senate obesity report: Number of obese children
has tripled, adults has doubled across Canada since 1980,” Peter Zimonjic (March 1, 2016), CBC
Canadian senate’s obesity report and its recommendations, and counters with failed examples
of taxation in other countries.]
World Health Organization, “Global Health Observatory (GHO) data,” (2014),
“The Extraordinary Science of Addictive Junk Food,” Michael Moss (February 20, 2013), New York Times
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world’s largest food companies, in 1999, admitted culpability in their contribution to growing
obesity levels, and what they did—or did not do—in response.]
“What is the single best drink for your health?” [DocMikeEvans video], Mike Evans (October 18, 2014),
Evans Health Lab: Whiteboard Health Videos, accessed at
benefits of one, in particular.]
“What’s the Best Diet? Healthy Eating 101,” [DocMikeEvans video], Mike Evans (September 24, 2015),
Evans Health Lab: Whiteboard Health Videos, accessed at
in health, lifestyles, foods, and diets, scientific evidence, and recommends changes.]
United Kingdom, Department of Health. “Public Health Responsibility Deal,” 2010-2015,
include the food industry’s efforts to reduce salt and sugar under its voluntary “Responsibility
Deal.” The information was “published under the 2010to 2015 coalition government.”].
Business & Professional Ethics for Directors, Executives & Accountants, 8e
2. Buying and Selling Blood (Chapter 1, page 34)
What this case has to offer
This case examines whether is it ethical to buy and sell blood and, by extension, other body parts that
are essential to life. The case invites a comparison of these products to commodities and a discussion of
why the sale of human organs is illegal and/or considered abhorrent in many countries.
Teaching suggestions
This is the first case I use each semester because it clearly illustrates that a good analysis must include
both social and economic factors. I begin by asking students to explain why this is a good business idea,
This case can be used to look at questions of altruism versus financial gain; volunteerism versus
exploitation; demand for blood, tissue and organs versus their limited supply or the need to increase
their supply. A discussion of Maslow’s Needs Hierarchy can be useful in discussing how ethical values
Discussion of ethical issues
1. Is it unethical to pay donors for making blood donations?
The practice of paying for blood differs depending on the jurisdiction. In the U.S., blood is paid
for, but in Canada, it is not, generally speaking. Whether the practice is unethical, depends
upon the potential impacts on the stakeholders, particularly on donors who might be harmed,
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If we look at the 6 Question Approach for evaluating decisions, we’re stopped at fairness and
the impact on stakeholder rights with this issue. Exploiting the disadvantaged offends the rights
of that stakeholder group. And the company’s profit at the expense of others or by capitalizing
on altruism is not fair, so paying donors for blood “donations” seems unethical.
2. Is blood a commodity that can be bought and sold like any other commodity?
A World Health Organization (WHO) report says that “Blood and blood products are a unique
and precious national resource because they are obtainable only from individuals who donate
1 “Pro–Public Healthcare [Position paper],” Amélie Baillargeon, September 8, 2016. Canadian Health Care Coalition
3 World Health Organization and International Federation of Red Cross and Red Crescent Societies. 2010. Towards
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3. Is there a difference between selling blood that can be used in transfusions and selling blood that
will be used to make pharmaceutical products?
While transfusion blood is transferred from donor to recipient and may have an associated cost
4. Do companies, such as Canadian Plasma Resources, contribute to drug addiction and alcoholism by
locating their clinics in poorer neighbourhoods?
A WHO report says, “Paid donors often lead lifestyles that expose them to the risk of HIV and
other infections that could be transmitted through their blood. The highest prevalence of
transfusion-transmissible infections is generally found among paid or commercial donors.
People who accept payment for their blood are primarily motivated by the prospect of
monetary gain rather than a desire to help save lives. The need to protect their income from
Useful Articles, Links, and Videos
“Pay for plasma: Calls for and against it from those affected,” Julia Wong, Global News, May 1, 2016,
4 World Health Organization and International Federation of Red Cross and Red Crescent Societies. 2010. Towards
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World Health Organization [WHO] and International Federation of Red Cross and Red Crescent Societies.
Chapter 7: Organ Donation, in The Canadian Bioethics Companion: An online textbook for Canadian
“Death, where is thy bling? The cadaver market.” (February 1, 2014) The Economist,
Business & Professional Ethics for Directors, Executives & Accountants, 8e
3. Pedophile Priests in the Catholic Church (Chapter 1, page 35)
What this case has to offer
This is a good case to begin a discussion of whistleblowing, and to reflect on the problems of an
Teaching suggestions
Have a class member provide a summary of the Singer article “The Whistle Blower: Patriot or Bounty
Hunter?” located at the end of Chapter 1. This will set the stage for discussing the problems a
whistleblower faces, and why whistleblowing is essential to good corporate governance – it enables
Discussion of ethical issues
2. What are the responsibilities of employees who become aware of unethical behavior by their
superiors?
Often, employees are afraid to report wrongdoing because of the stigma of being labelled a
3. What actions should be taken by corporate leaders when they receive reports of sexual abuse?
Why?
Corporate leaders must conduct a thorough and private investigation into any reports of
wrongdoing. The investigator must be mindful that the whistleblower may be falsely accusing a
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4. If unethical or illegal behavior occurs within a business enterprise, how can employees bring about
change when initial reports are ignored?
Ultimate responsibility for the activities of the firm rests with the board of directors. If initial
5. Why do you think that senior managers want to cover-up scandals that occur within their
organizations?
Managers want to protect their personal reputation as well as the reputation of the firm. A loss
6. What actions can senior managers take to repair the damaged reputations of their organizations
after scandals become publicly known? Do you think that apologies are worthwhile?
The organization must create and ethical corporate culture by correcting its operational routines
Useful Articles, Links, and Videos
Basford, T.E., Offermann, L.R., and Behrend, T.S. 2014. Please Accept My Sincerest Apologies: Examining
Follower Reactions to Leader Apology. Journal of Business Ethics 119 (1), 99-117.
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This video uses a medley of television news reports from the 1980s onwards to provide a history
of repeated abuses by Catholic priests and repeated promises to end the abuse. The video
caption asks the question, “Sexual abuse in the Catholic Church has been making headlines for
years. Some priests have been punished, but what about the bishops who shielded them?”
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4. Sexual Abuse by a Penn State Football Coach (Chapter 1, page 36)
What this case has to offer
The case describes an important scandal and cover-up. It highlights how an organization’s departments
Teaching suggestions
Ask students who have been on sports teams to describe the culture of solidarity.
1. Discuss how team members are to contribute ‘a hundred and ten percent’.
Discussion of ethical issues
1. Football is big business, raising millions and millions of dollars for American universities. Numerous
administrators and officials at Pennsylvania State University put a higher value on college football
than on the welfare of children. How would an organization develop such a misguided culture?
2. Louis French discovered that a janitor saw Jerry Sandusky abusing a boy in the showers in 2000, but
said nothing because he was afraid to “take on the football program.” Why do you think that certain
organizational departments and programs develop a mystique such that their activities and
behaviors cannot be challenged nor questioned? What can an organization do to prevent this from
happening?
Meyer and Rowan (1977) argue that many activities and departments within an organization
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Useful Articles, Links, and Videos
Meyer, J., and Rowan, B. 1977. Institutionalized Organizations: Formal Structure as Myth and Ceremony.
American Journal of Sociology 83, 340-363.
This author reviews the film, “Happy Valley,” saying it is “a gripping inquiry into the revelations
of sexual abuse that shocked the U.S. and devastated Penn State’s storied football program.
Rather than focusing primarily on Jerry Sandusky’s crimes, the film broadens in scope and
complexity to examine the assumptions of an entire community, as well as the football-first
culture that allowed evil to flourish in its midst.”
Jerry Sandusky’s Son Discusses Alleged Sexual Abuse, Associated Press, News Loop, July 17, 2014,
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Advertising & Sales Promotion Cases
5. Tiger Woods: “Winning Takes Care of Everything” (Chapter 1, pages 36-37)
What this case has to offer
Can success – celebrity, wealth, profitability, and prowess – replace the hypernorm values of
responsibility, integrity, honesty are key discussion points in this case. Many students and
Teaching suggestions
I have found it helpful to start by asking how many students play golf or are familiar with Tiger Woods.
Discussion of ethical issues
1. Does winning take care of everything? In golf? In life? In business?
No, it should not—but it often does cause blind eyes, particularly in the short run. Consider a
performance evaluation: it is based on many performance measures, not a single one. Also,
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2. Does how you play the game or run your business ever matter?
If you learned that your investment banker lied and cheated on his wife and in your last week’s
tennis game, do you suppose that you would wonder how s/he conducts business? Most of us
3. Is the reputational impact of unethical behavior different for a sports star than for a business, or for
yourself?
Tiger Woods, and many other sports stars, are phenomena: we are so in awe of their feats—and
don’t want to miss the thrill of their next appearance—that we are often blinded to their
emulate or endorse by buying.
In the business world, scrutiny of high-level people is less intense if they lack celebrity appeal,
but negative reaction can be as significant, and questions can be raised about suitability for
promotion or termination can result. While Tiger Wood’s celebrity may protect him from fall–
out from some misbehavior, it is unlikely that a business person or professional would be
similarly protected. For individuals wanting to work in positions of trust – such as professional
accountants – the negative fall-out could be career-ending.
It may be helpful to consider other instances where unethical behavior has been negatively
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Useful Articles, Links, and Videos
“For Tiger, winning does take care of everything,” Roxanne Jones (March 27, 2013), CNN,
celebrities don’t have the job of teaching children; parents do.]
“Donald Trump, ‘Locker–Room Talk’ and Sexual Assault,” (Numerous authors, October 10, 2016). The
of Donald Trump speaking crudely about women and boasting of his sexual exploits.]
“Donald Trump Apology Caps Day of Outrage Over Lewd Tape,” Alexander Burns, Maggie Haberman,
“Watch: Michelle Obama’s powerful speech on the Trump sexual assault allegations ,” (October
eloquent speech on the denigration of women by U.S presidential candidate Donald Trump, why
we should expect high standards of behavior, especially from leaders.]
“We Shouldn’t Have Needed Photos to Understand Greg Hardy’s Violence: Stephen A. Smith didn’t
change his tune on Hardy until Deadspin’s report. That’s wrong,” Justin Block (September 11,
violence_us_5640a2c4e4b0307f2cadf8e5
“Ray Rice terminated by team, suspended by NFL after new violent video,” Jill Martin and Steve Almasy