ACCT 4346 FINAL

Sarbanes-Oxley 404

Compliance section requiring the assessment of control effectiveness, driving cultural and accounting changes

Tone at the top

Ethical climate and culture which is determined from an organization’s leadership

Concern for People & Performance

• Focus on employee well-being

• Focus on output and productivity

The 4 Organizational Culture Types

Apathetic, Caring, Exacting, and Integrative

Cultural Audit

Assessment of cultural values conducted by 3rd party consultants on an organization

Compliance-Based Culture

Legalistic approach focusing on risk management over ethics

Value-Based Ethics

Relies on mission statements and values that emphasize integrity, prioritized higher than the law

Differential Association Theory

Theology recognizing that ethical and unethical behavior is learned through interactions with others internally

Whistle-Blowing

Reporting an employer’s wrongdoing to external entities protected legally under SOX, FSGO, and Dodd-Frank.

What are the 5 Power Bases

Reward, Coercive, Legitimate, Expert, Referent

Centralized vs Decentralized Organizational Structure

Decision making authority is…

• Given to top-level managers and effective decision makers for high-risk

• Delegated, fostering flexibility and quicker external adaptation.

Group Norms

The standard behavior expected within formal and informal organizational groups

Corporations as Moral Agents

The idea that corporates hold similar rights and responsibilities as individuals do and must implement those ethics to promote a moral behavior

Components of a strong ethics program

Written codes of conduct, ethics officers, formal training, 3rd party auditing, and enforcement mechanisms

Ethics Officers

Professionals responsible for managing ethics programs, training employees, and ensuring compliance with ethical standards

Systems to monitor ethical standards

Audits, investigations, reporting systems, consistent enforcement

Continuous improvement in Ethics

Live adjustments in decision making processes and delegation of authority to enhance ethical performance

Common design and implementation mistakes

Unrealistic objectives, lack of management support, ineffective content, and inadequate adaption to global operations.

Hofstede’s cultural dimensions

Framework that identifies:

• Individualism/collectivism

• Power Distance

• Uncertainty Avoidance

• Masculinity/Femininity

Self-Reference Criterion

Unconscious reliance on one’s self of cultural values when assessing others, common in international business.

Cultural relativism

The belief that morality varies by culture and that culture defines ethical standards

Common Global Values

Integrity, equality, honesty, and contrasting negative traits such as greed and deceit

Risk compartmentalization

When corporate units operate independently leading to systemic ethical issues without a clear sense of accountability

Rational vs Behavioral economic

• Assumes decisions maximize utility

• Accounts for emotional and irrational behaviors

United Nations Global Compact

Voluntary initiative promoting human rights, environmental sustainability, and anti-corruption practices globally.

Dumping

Selling products abroad at lower prices than domestic markets to create unfair competition to local businesses

Bribery

Offering value for influence in business, deemed ethical or not varying off entity’s culture. Governed by the US Foreign Corrupt Practices Act

Antitrust activity

Laws that ensure fair competition, preventing monopolites and vertical systems from dominating markets.

Labor & Right to Work beliefs

Gender pay equality, union rights, improving global living standards

Consumerism

Advocates for consumer-driven economics, criticized for promoting unsustainable consumption patterns

Ethical leadership and its requirements

The ability to guide and direct others ethically and move them toward a culture that promotes ethical behavior. Requires organizational values, training, and establishing reporting systems.

What are teh 7 habits of strong ethical leaders

Modeling values, prioritizing organizational goals, addressing ethical issues proactively, and possessing strong personal character

Benefits of ethical leadership

Improves corporate culture, increases employee satisfaction, enhances stakeholder relationships, positively impacts financial performance

Compliance and Integrity based leadership

• Focuses on adherence to rules

• Emphasizes core rules and accountability

What are the 5 conflict management styles?

Competing, Avoiding, Accommodating, Compromising, Collaborating.

Groupthink

Pressure to conform to group decisions even if it goes against personal beliefs

Group Polarization

Groups move toward more extreme decisions than individuals would. Byproduct of consistent groupthink

Leader-Follower relationships

Idea that good leaders align visions and ethical goals with employees to foster trust and consistent communication

Leadership Styles

• Coercive - Demands compliance

• Authoriative - Inspires and motivates

• Affiliative - Focuses on harmony

• Democratic - Encourages participation

• Pacesetting - Sets high performance standards

• Coaching - Develops employee skill

RADAR Model

Recognize ethical Issues

Avoid misconduct

Detect risk areas

Answer stakeholder concerns

Recover from ethical lapses

Feedback mechanisms

Performance evaluations, surveys, open comms to gather employee insights

Power difference in workplace politics

Ethical leaders migrate power based on collaboration, reducing manipulation, and using political skills to support goals.