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A. David Austill, JD, LLM, MBA, CPA Professor of Accounting & Bus. Law Union University Jackson, Tennessee, U.S.A.

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Presentation on theme: "A. David Austill, JD, LLM, MBA, CPA Professor of Accounting & Bus. Law Union University Jackson, Tennessee, U.S.A."— Presentation transcript:

1 A. David Austill, JD, LLM, MBA, CPA Professor of Accounting & Bus. Law Union University Jackson, Tennessee, U.S.A.

2 Why is teaching ethics necessary? Countrywide Financial—Mortgage lending Large banks dealing in mortgage-based derivatives Enron WorldCom Parmalat Union Carbide--Bhophol Runaway plants Securities fraud Invasion of privacy (employee and customer)

3 Josephson Institute of Ethics Institute issues biennial reports on the ethics of American high school students. The 2008 report of 29,760 students revealed: 64% cheated on an exam (38% two or more times) 36% used Internet to plagiarize and assignment 42% lied to save money 30% stole something from a store (20% from a friend) Cinicism—93% were satisfied with their personal ethics and character and 77% affirmed “that when it comes to doing what is right, I am better than most people I know.” Generally, results were getting worse.

4 Josephson Institute Continued 2009 online study of 7,000 persons to assess adult behavior regarding common issues of integrity and to determine the impact of age, cynical attitudes about honesty, and high school character. Conclusions were: Age matters: Younger generations are significantly more likely to engage in dishonest conduct than those in older cohorts. Attitude matters: Regardless of age, people who believe lying and cheating are a necessary part of success (cynics)are more likely to lie and cheat. High school character matters: Regardless of current age, people who cheated on exams in high school two or more times are consideraly more likely to be dishonest later in life. Bottom line—start ethics training early to build character to last a lifetime. This has a direct application to ethics education in business.

5 Academic Dishonesty of Graduate Business Students McCabe, Butterfield and Trevino found that over half of the surveyed graduate business students admitted to cheating during the courses of their programs.

6 Business Deans’ View of Integrity and Ethics Training Jeffrey Garten (Yale): “…[T]he crowd is often wrong. The height of courage and integrity is to look at your competititon and ask whether you really want to be swimming in that same stream.”

7 Views Continued Steven Jones (North Carolina at Chapel Hill): “…But business people know through their experiences, and academics through their research, that integrity is the essential foundation of a successful career. If we are not doing our best to instill it and nurture it, then we are not servicing our students or community. If business schools want to be at the forefront of keeping business ethical, we have to take action ourselves….We must expose students to real-life examples of complex corporate dilemmas, including many where there is no “right’ answer, to help them identify the ethical challenges they will face in corporate life. The key is to arm them with the skills to identify critical ethical issues and to use a thoughtful, fair approach to resolve them. This method will give students useful tools while reinforcing the vital point that doing the right thing matters.

8 Debate Over Teaching Ethics Some deans and faculty believe there is no role in teaching ethics to business students: Adult students have already formed their views on ethics. Goes against the mission to teach business students how to create shareholder value.

9 Timothy Flynn, CEO of KPMG LLP, in response to the question about whether integrity is a teachable trait: You have to use situational learning to teach ethics. Three things contribute to ethical lapses: (1) rationalization, (2) implied permission, and (3) fear. “You are the one who will set your compass. Once you lose integrity, it’s almost impossible to get it back—but it’s in your hands to retain it.”

10 Attitudes of MBA Students CarringtonCrisp study of 700 aspiring MBA’s in 91 countries revealed that ethics ranked in the bottom four out of 30 factors in choosing business schools. Studying ethics is not important. Only 5% thought it would be important to learn specifics about ethics as part of their MBA education. They prefer to have ethics embedded in all courses. Compare to the GMAC study where: 81% of respondents said the recent (2002) corporate scandals created an atmosphere of distrust of corporations Regarding job search behavior, 64% said they were more likely to accept a job offer from a reputable company versus one under investigation

11 Ethics Training for Accountants State boards of accountancy generally require continuing professional ethics credit. Ethics are more important to the profession but universities have been less likely to offer quality ethics training to accountants. Texas requires candidates for the CPA Exam to have completed a 3-credit hour college course in accounting ethics.

12 AACSB International Approach Association to Advance Collegiate Schools of Business International Mission is to advance quality management education worldwide through accreditation and thought leadership. Focuses on larger business programs Requires training in business ethics As of July 2010, 596 member institutions hold AACSB Accreditation. Overall, 37 countries are represented by AACSB-accredited schools.

13 AACSB-Accredited Schools 47 institutions have undergraduate programs only (8% of accredited members) 52 institutions have graduate programs only (9% of accredited members) 173 institutions have AACSB’s additional accounting accreditation 497 institutions have both graduate and undergraduate programs (83% of accredited members)

14 Approaches to Teaching Ethics Small church-affiliated business schools have focused on ethics from a human perspective. Corporate social responsibility has been taught in MBA programs for over three decades. AACSB allows business schools to either teach a course in business ethics or to incorporate ethics into the business courses (e.g., marketing, management, finance, etc.)

15 Continued Within most business programs, a chapter on ethics is included in the first law course (usually, legal environment of business). The LEB course then highlights ethical issues throughout the course. This creates a cramped course with too much material and not enough time devoted to ethics.

16 Global MBA Graduate Survey 2003 GMAC survey method– 75 U.S. schools, 3225 respondents, median age 29 Methods used to incorporate ethics: Speakers56% Required core course(s)46% Integrated case studies w/n some courses44% Referred to in most courses40% Elective course(s)40% Workshops26% Integrated case studies w/n most courses18% Outside assignments/projects17%

17 MBA students do not prefer stand alone ethics courses. They prefer that ethics be incorporated into other business courses.

18 Institute for Corporate Ethics Study 2006 survey of the Society for Business Ethics members: 63 universities, 12 outside U.S. Findings: Requiring ethics course—52; ethics integrated into courses—41 31 had specially-focused ethics courses Use of case studies (95%--integrated and 90%--stand alone) Requiring philosophy/ethical theory readings (68% and 73%, respect.) Use of speakers (76% and 40%, respectively)

19 Findings Continued When ethics education is embedded in other business courses, respondents felt the program was more effective (76% either excellent or good versus only 34% of those using stand alone course) In recent 3-5 year period there was growth in ethics training more ethics courses are taught now the number of ethics faculty have grown Non-ethics teaching faculty have a more positive attitude toward ethics education Generally respondents from programs using an integrated approach were more positive than those respondents from programs using an ethics course.

20 Swanson and Fisher—Advancing Business Ethics Education Authors do not have a favorable view toward business ethics education today based on: Failure of AACSB to require an ethics course Fixation on behavioral models derived from neoclassical economics orthodoxy that emphasizes rational self-interest at the expense of other-regarding behavior. Dean and faculty indifference, skepticism or opposition to changing attitudes of adult students. Business faculty have a vested interest in retaining their courses using conventional topics in curriculum. Agency-based conception of professional responsibility rather than self-discovery.

21 What Should Be the Emphasis? Corporate social responsibility versus the individual ethics versus sustainability Domènec Melé, Chair of Economics and Ethics, University of Navarra, Barcelona, Spain, is a proponent of teaching virtue ethics to managers: “…Given that almost every business decision affects people, every decision has an ethical dimension. Therefore, ethics should be covered in practically every course.: “…Not all faculty stress to their students the role that virtues play in the lives of business managers. Yet I believe more faculty need to follow this path if we want to increase the ethical standards of our business students and, by extension, our business leaders.”

22 Institute for Corporate Ethics View Diane Swanson (Kansas State): Recommends the following three-part benchmark standard for business ethics education: A foundational ethics course is necessary. Efforts to integrate ethics across the curriculum should be a goal. Extra-curricular initiatives, such as offering service learning projects, are highly desirable.

23 Recommended Approach Teach a stand alone business ethics course. Have the course taught by someone with a business background but with an interest in teaching the course. Make the course case oriented: Bring the real world into the classroom through cases Train the students in the mold of Aristotle—moral growth through habit Remember, morality is not the same as lack of opportunity.

24 Continued Cover the philosophical foundations/theories of ethics as they relate to business. Provides for enhanced ethics training. Do not avoid religion as an element of moral duty. Cover several major religions for comparative purposes. Avoid utilitarianism as a one-size-fits-all approach to analyzing ethical problems.

25 Continued Focus on personal character in ethical decisionmaking: Virtue ethics is important Have a strong cultural or global component to the course. Make the course fun and interesting: Classical works, movies, stories, anecdotes

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