Ethics Taxonomy Dimension 2: Regulation and Compliance

Abstract

For managers, few ethical issues can be both as lucrative and damaging as fraud and corruption. By deceiving their stakeholders about product quality, accounting statements, insurance claims, etc., managers can dramatically improve a corporation’s performance, at least in the shorter term. And they can abuse their official position by accepting bribes for personal gain, while by paying them they might also generate business that would otherwise have gone to a competitor who is willing to grease palms. Yet a dilemma results from the fact that by engaging in fraud and corruption, managers risk jail time and hefty fines as well as severe negative consequences for their corporation, the defrauded, and the market as a whole.