Corporations deal with ethical issues everyday and as a result of this there should not be a need for government regulation; but because of human nature some people and groups of people need to be watched and audited. When companies perform daily operations there are a number of activities that take place such as; dealing with customers, exchanging and recording currency, employee or future employee issues and executive issues to name a few.
The government imposes strict regulations on all business to protect all concerned parties and these regulations are enforced on a regular basis. In order for individuals or smaller companies to get fair treatment large corporations need to act ethically. This may not be possible without regulations on such things as finances, equal opportunity employment or on the job activities. The impact of ethical and social responsibility regulations on businesses can be very big in some cases. One very good example in recent years would be the Enron case.
There were some top executives committing some very unethical as well as criminal activities. These activities were investigated and most of those responsible were punished. It was Lay who grabbed center stage, telling his awed peers how Enron Corp. was rewriting the rules of the energy business by applying “new economy” thinking to an “old economy” industry. Now it looks as though Lay and Enron weren’t rewriting the rules, they were simply ignoring them. Enron was painted as a successful company. But some of that success was fictitious.
On Thursday, the company said it would restate its financials going back to 1997, trimming about 20 percent of the profits because of losses that were kept off the books. (Pletz, 2001) The top Enron executives overstated the company gains and profits by billions. Even though the punishment may not have been enough to completely repair the crimes, they were still punished. The actions of these executives caused an entire company to go bankrupt and a large percentage of its employees to loose jobs and their entire investment.
Other situations could include sexual harassment, unfair treatment of employees or discrimination while in the process of hiring an individual. I completely agree with the above thesis. In corporate America there are many people who believe they can get away with anything simply because they have money and power. These people need to be regulated with laws that protect whoever they deal with.
Reference
Corbett, J. Syllabus for FIN/475 – Managerial Finance I. Retrieved January 29, 2007, from BSBA5. 12-12. BSAH00PDK5-FIN475. Course-Materials Newsgroup