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November, 2007
Ethics talk calls on 4½ years of prison
time
Norfolk
Virginian-Pilot,
November 30, 2007
By Philip Walzer |
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A former financial
planner convicted of money laundering,
bribery and conspiracy offered a lesson
in ethics this week to business students
at Old Dominion University. “I got into
a little bit of trouble,” said Patrick
Kuhse, who spent four years hiding out
in Costa Rica and then 4½ in prison
after he surrendered. “It cost me four
things: my country, my assets, my
freedom and my family.”
Dean Krehmeyer,
executive director
of the Business
Roundtable Institute
for Corporate
Ethics, based at the
University of
Virginia, hasn’t
heard Kuhse speak
but is familiar with
similar speakers.
They “convey a very
brutal message of
the consequences of
one’s actions,” he
said. But “we need
to be careful that
this message doesn’t
become the complete
message about
business ethics.
It’s not just to
avoid breaking the
law and the rules. …
We should be seeking
to inspire students,
not just scare
them.”
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First in His Class Action: The Rise and
Fall of William Lerach
WIND-AM (IL),
November 17, 2007
By
Carl Horowitz |
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...corporate
corruption remains a fact of life. A
company does neither itself nor the free
enterprise system any good by committing
acts of malfeasance and hiding them from
the public.
Without
integrity, disaster looms, especially
with pay structures in place that
encourage deception. University of
Virginia business professor Jared Harris
recently concluded that executive
compensation packages heavily geared
toward stock options and other
performance incentives have been a major
factor behind corporate crime.
(This article also appeared on KKOL-AM
[WA].) |
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Chiquita, Yahoo Find
Trouble Overseas
National
Public Radio (NPR), November
16, 2007 |
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This week, Chiquita was sued for
payments it allegedly made to Colombian
paramilitaries, and Yahoo issued a
formal apology for passing information
to the government of China which
resulted in the jailing of two Chinese
citizens.
Corporate ethicist
Norman Bowie
explores the ethical quandaries faced by
multinationals.
(This radio
interview also appeared on Lincroft
WBJB [NJ].) |
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Reconciling Religious
Beliefs with Work
MSN.com (NAT), November
8, 2008
By Eva Tahmincioglu |
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What if
your religion required you to wear a
beard but your employer has a
no-facial-hair policy for all its
delivery drivers? More and more, people
of faith are deciding they don’t want to
leave their religion at the office or
factory door, and they want managers to
accommodate their beliefs.
"People
aren’t
content
to
segment
religious
life and
work
life
anymore,"
says
Andrew
Wicks, a
professor
at the
University
of
Virginia’s
Darden
School
of
Business. |
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Citigroup and
Prince: Too-Risky Business
washingtonpost.com, November
7, 2007
By Steven Pearlstein |
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Darden professor, Jared Harris, has
recently studied all the accounting
restatements made by major corporations
from 1997 to 2002 that were found to be
the result of intentional
misrepresentation. And what he found was
that the propensity to cheat was highly
correlated with executive compensation
packages heavily weighted (75 percent or
more) toward performance pay.
In a sense, that is the idea behind
performance pay -- to give executives
the incentive to take the risks that
offer the big payoffs for investors, and
then manage those risks. But what Harris
found is that at a particular point,
when performance pay tops 90 percent,
the incentive becomes so strong that it
encourages bad risks as well. And that
would apply equally, he reasons, to
financial risks as it does to the
ethical ones he studied. |
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Earnings Guidance – Does It Still Make
Sense?
Business Wire (press release),
November 6, 2007
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The New York Chapter of the National
Investor Relations Institute (NIRI-NY),
in conjunction with the organization’s
Philadelphia Chapter, will host a panel
discussion to explore the evolving
practice of earnings guidance at
publicly traded companies.
The program will explore the pros and
cons of providing guidance in general,
as well as various methods and timing.
The discussion will include the
recommendations of the CFA Institute and
the
Business Roundtable Institute for
Corporate Ethics.
Panelists will include
Dean Krehmeyer,
Executive Director of the Business
Roundtable Institute for Corporate
Ethics. |
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Performance-Pay
Perplexes
The New Yorker,
November 5, 2007
By
James Surowiecki |
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The way that hedge-fund managers and
investment-bank C.E.O.s get paid is
supposed to make them perform better for
the investors they serve. In practice,
though, things don’t always work that
way. Not surprisingly, a recent study of
almost a thousand companies found that
C.E.O.s whose compensation was made up
mostly of stock options tended to “swing
for the fences,” making investments and
acquisitions that were riskier than
those made by other executives. Generous
options grants may also encourage fraud;
business professors Jared Harris and
Philip Bromiley, who have made a study
of hundreds of firms forced to restate
earnings after accounting
irregularities, found that companies
that paid out most of their compensation
in stock options were far more likely to
end up restating earnings. |
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