Individual Responsibility in the American Corporate System
Free Essay on Corporate Social Responsibility
Sarbanes-Oxley Act (also known as Sarbox or SOX) that was enacted in 2002, as result to the numerous corporate scandals. At the time corporations such as Enron, Peregrine Systems, Tyco international, WorldCom and Adelphia had been involved in such scandals that cost the shareholders of such companies’ large chunks of money in share price losses; eventually the public confidence was completely shaken. This Act that was sponsored by Paul Sarbanes and Michael G. Oxley after whom it’s named after applies to corporations; among the eleven titles contained in SOX, is that of corporate responsibility that requires that all shareholders, executives, managers take individual responsibility. The executives should therefore present accurate and valid financial reports. In SOX the confines of corporate officer’s behaviors are detailed and measures for not heeding to them described (Piotroski & Joseph, 2008).
In the journal Business and Professional Ethics 23:9-41; the article “Individual Responsibility in the American Corporate System: Does Sarbanes-Oxley Strike the Right Balance?” by Boatright, scrutinizes the responsibility that ought to be inflicted on the various parties in the corporate world. In his article Boatright, pores over the SOX Act which attempts to augment individual responsibility and raises the query of the level of responsibility that can be implicated on an individual. To answer the question Boatright uses the economics and behavioral law approach as well as the transaction costs an agency theory approach. In the explanations that he gives, it’s agreeable that in order to avoid the corporate and financial scandals it is requisite that the executive officers should present accurate and complete financial reports in quarterly basis.
The basic purpose of laws governing corporate responsibility is deterrence this I agree because responsibility is placed on different individuals and corporations as well (Boatright, 2004). Individuals therefore take responsibility of their actions, as Boatright argues that much responsibility should be put on both the corporations and the shareholders, by so doing instead of placing responsibility on an individual everybody takes up full responsibility. In the case of Central bank of Denver vs. First Interstate Bank of Denver it is clear that the individuals in the corporations’ aid misconduct which result into scandal, the protection that is given is thus vindicated (Boatright, 2004).
Appealing to the ethical theories which are use to describe the codes of behavior that ought to conduct. Appealing to the Deontological theory where one is supposed to follow their duty to another person because it is ethically right, just like an older sibling protects his/ her siblings in the same way, a manager would take responsibility for his corporation making sure that the right reports are issued and on time because it his full responsibility, when a company collapses the shareholders suffer losses. Also in the utilitarianism theory, the consequences of an action are fundamental and the action that is of the greatest benefit is considered to be ethically correct.
As considered in Act utilitarianism one does what right irrespective of the constraints which hold, also in rule utilitarianism what is fairest and just and beneficial to all people is considered to be ethically correct (Rainbow, 2002). Appealing to the utilitarianism theory, the consequences of an individual’s misconduct cause a lot negative implications on the company. If a person is caught conducting any activity that is detrimental to a corporation’s core values, legal action should be taken so that it serves as a lesson to others and to avoid such occurrences in future, that could lead to collapse of corporate institutions.