Business Ethics Chapter 7 Homework Questions For Discussion Describe The Situation Facing

Unlock access to all the studying documents.

View Full Document

Chapter 7: Finance and Accounting

Sample Discussion Answers

1. What is finance with and without ethics? What are some of the core reasons why

many look at finance with ethical skepticism? Are these reasons sound or

misconstrued? (p. 233)

Finance without ethics simply assumes that finance, whether treated as a method,

operation, or industry, holds no intrinsic moral content. Here, finance is strictly about

numbers and generating financial returns – ethics is a separate topic. Explicitly, this is not

2. How does ethics factor into thinking about finance as a method? What key

questions do managers need to ask as they perform a financial analysis of a project?

(p. 234)

A key aspect to finance as a method is valuation – assigning values or priority among

competing goals and deciding how to view certain information. Thus finance, as a

Questions managers need to ask as they perform a financial analysis of a project include:

1. What alternatives are not being considered? Are there alternatives that meet the

needs of multiple stakeholders or multiple standards of conduct?

2. Have I examined the assumptions to ensure they are in keeping with the values

of the organization? Can I stand by these assumptions? Am I making these

assumptions as transparent as possible to key stakeholders?

3. Does the model take into consideration alternative priorities and goals?

4. Who is impacted by this model? Have I included these stakeholders in the

process?

5. Am I positioning this model as one possible answer? Am I giving the audience

3. How should stakeholder theory (and key themes from Chapters 1 through 3)

influence core elements of finance? (p. 237)

Companies, such as Enron, have fallen for failing to view their financial partners as

stakeholders. By thinking of sources of financing as partners rather than as cash-cows,

4. What is accounting with and without ethics? (p. 245)

The common perception of accounting without ethics is one that is neither moral nor

immoral, but amoral. Accounts, according to this view, are merely “bean counters” whose

5. How do the elements of Chapter 1 help us ask some core questions about financial

accounting and the creation of financial statements? (p. 250)

Take a look at the questions listed on page 250. They may be worth discussion, as they

are all applications of concepts introduced in chapter 1.

1. Are the actions of the firm violating any regulations or laws? Are the

financial statements abiding by the letter and spirit of the rules and

regulations?

Once again, we are asking ourselves what the morally right actions are. We are

2. Are the actions of the firm likely to jeopardize the reputation of the firm or

its key personnel? Are the financial statements hiding any such actions of the

firm?

3. Have I taken into account all of the relevant stakeholders and taken steps

to ensure not only the success of my operations but that I have not unduly

burdened or harmed others? Who is using this information and for what

purpose? Have I taken into account both short-term and long-term

stakeholders such as individual and corporate investors and creditors,

government regulatory bodies, taxing authorities, and the accounting

governance structure (as outlined earlier)?

4. Could I defend my decision if all the information became public?

5. Would I agree with the statements if I were relying upon them as an

outside investor? Are we withholding information in the name of clarity or in

order to deceive the recipient?

6. What practical guidance would you offer to accounting managers as they go

about their work?

NoTel*

Teaching Notes

Synopsis

Strategic Investment (SI) associate research analyst Todd Thompson is using his Friday

train ride home to work on his earnings model. He checks in with his client, Charles

Buron, an investor relations manager at NoTel, to run his estimate and get some

feedback. Buron interrupts to warn Thompson that one of his firm’s institutional sales

Objectives

The NoTel case offers to provide a more concrete example of ethics in finance and show

that Finance, far from being a neutral profession of bean counters, is laden with ethically

charged issues. A healthy ethical culture is critical to maintaining good business

relationships and a company’s reputation. The way that Thompson handles this problem

will reflect on his personal integrity and the reputation of his company.

Day’s decision to release sensitive information is also worthy of discussion and may be

useful in distinguishing good and bad consequences from the intentions that were behind

the respective actions. Students should be encouraged to imagine themselves in his

position, or consider if they have been in a similar situation and did not realize it at the

time.

Questions for Discussion

1. Describe the situation facing Todd Thompson. What are his options? What is at stake

for him in this decision?

2. Who are the stakeholders here? Who is affected by this decision? Is there any priority

among stakeholder interests here? Who stands to gain or lose the most?

3. Would you consider Robert Day’s decision to release sensitive information to be moral,

amoral, or immoral? How does that factor into your view of Thompson’s predicament

and what he should do?

4. Thompson’s next phone call is to you, his boss. What would you say and why? What

wouldn’t you say?

5. Regardless of which decision you make, what follow-ups does Thompson need to

make? What should his priorities be?

Suggested Class Plan (85 Minutes)

1. Question 1 (15 minutes): Ask students to identify the problems facing Thompson

and propose ways for him to resolve them? What could happen at the

presentation? How can Thompson regain good standing with Burton? What

2. Question 2 (20 minutes): It seems that in this case, a lot of Todd Thompson’s

suffering is the result of Robert Day’s rather myopic view of people who would be

3. Question 3 (20 minutes): Some may find it easy to cast Robert Day as the villain.

But we have to consider 1) what motivated his decision and 2) whether or not we

would have done the same thing in his situation. If Day acted out of a genuine

conviction that it is morally right to release accurate information, for the benefit

of the public and the company in question, then would his action be considered

morally acceptable, even righteous? If anyone can say that he or she would have

acted differently in Day’s position, what reasons can that person cite for behaving

4. Question 4 (15 minutes): Answers to this question are restricted only by the

creativity of the students. This question provides the instructor a great opportunity

5. Question 5 (20 minutes): regardless of what Thompson does here there will be a

mess to clean up, or at least ongoing tensions that can become a problem for him

Ben & Jerry’s

Teaching Notes

Synopsis

By early 2000, Ben & Jerry’s Homemade Ice Cream, Inc had publicly announced that it

had received generous offers from Chartwell Investments, Dryer’s Grand, Unilever, and

Meadowbrook Lane Capital to buy out the company. The news created a tremendous

degree of backlash from Ben & Jerry’s customers, suppliers, some shareholders, and state

Objectives

This case examines issues of asset control for Ben & Jerry’s Homemade, Inc., in light of

the outstanding takeover offers by Chartwell Investments, Dreyer’s Grand, Unilever, and

Meadowbrook Lane Capital in January 2000. The case provides a unique opportunity to

discuss fundamental firm objectives and the implications of poor financial performance

as it reviews the development of Ben & Jerry’s strong social consciousness and the

takeover defense mechanisms that maintain management’s control of company assets.

Taking the role of an outside board member, students may review management’s

performance, estimate the economics cost of current management practice, and evaluate

the implications of takeover defense strategies. Ultimately, students must take a position

on whether the board should defend the agenda of the current management team or accept

one of the takeover offers and support a shift toward a more traditional orientation.

Questions for Discussion

1. Why is Ben & Jerry’s considered an ethical company? Can you cite practices that merit

this reputation? Do you agree that they are a good company or not?

2. Who are the key stakeholders and what do they hope to gain or fear losing in this

transaction? Which stakeholders deserve special consideration here (or not)?

3. What are Ben & Jerry’s responsibilities to the shareholders? Do non-shareholder

customers have the right to a say in the direction of the company?

4. What do you think Ben & Jerry’s should do? Would it be best for the company to try to

remain independent or to accept a buyer’s offer?

5. Assuming the company does accept the buyer’s offer, what should the management do

once it is sold? How does your advice change (or does it) if you assume that the new

management genuinely wants to maintain the image of Ben & Jerry’s as an ethical and

socially responsible company?

Suggested Lesson Plan (85 minutes)

1. Class Vote (5 minutes): With a show of hands, ask the class to vote on whether or

2. Question 1 (20 minutes): This question should get students to think about what

makes a company “ethical” and evaluate why they hold certain companies in high

3. Question 2 (15 minutes): Who will stand to benefit from this transaction? Who

may be hurt by it? If the transaction proceeds, is there any way to compensate

4. Question 3 (15 minutes): The duty of management to the shareholders should not

be ignored. The trick here is finding that golden balance of obligations to the

5. Question 4 (20 minutes): Answers to this question are limited only by the

6. Question 5 (10 minutes): Here’s another opportunity for students to explore the

issues and let their own views of who B&J’s is, and how they should run the

company, going forward. This chance to look beyond the decision puts them back