Ethical Decision Making: The Sarbanes-Oxley Act

Is ethics concerning decision making merely an accepted way of life, a trust factor, or a concern for reputation? Is ethical thinking and decision making conclusions right for one individual or firm and wrong for another? Do ethics encompass a universal concept or do they reside solely in an individual realm such as one’s Id or ego as Freud claimed? Finally, do acts such as The Sarbanes-Oxley Act (SOX) create a sound solution to the problem of ethical or non-ethical decision making in public firms?

According to many scholars, the subject of corporate ethical decision making has many different avenues, such as what Zhong states “involves(ing) systematic and analytic deliberation” which also involve “intelligent choices”. While both Tversky and Kahneman state that it the ability “to maximize their utility… array of cognitive heuristics and biases”. Which simply mean problem solving while eliminating or setting aside one’s preferences, and Etzioni, Moore, and, Flynn continue to claim that “decision models continue to work under the assumption that decision makers should be deliberative and analytical (Zhong, 2001, p. 1)

In Babylonia and as early as 1700 BC there existed the Code of Hammurabi which basically laid down the law for that society. Was this the first step or process of moral awareness? This may have been one of the first written accounts concerning the use of ethics and decision making, Nagarajan, K. V. mentions, “The Code is considered the first important legal code known to historians for its comprehensive coverage of topics and wide-spread application” (2011, p. 108). This code in fact mirrors many of the Jewish laws set in the Torah, or the first five books of the Bible, another similar written account of moral ...

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...kn. The Effect of SOX Section 404: Costs, Earnings, Quality, and Stock Prices. Retrieved from http://www.afajof.org/afa/forthcoming/5790.pdf

K.V. Nagarajan (2011). The Code of Hammurabi: An Economic Interpretation. International Journal of Business and Social Science 2, 8.

Reference Continued

McAdams, T., Neslund, N., & Zucker K.D. (2009). Law, Business, and Society (9th ed). New York, NY: McGraw-Hill Irwin.

UMUC, Ethics and SOX Powerpoints, references and notes presented by Professor George Petrello, for Summer 2011 The Economics of Management Decisions.

Wagner, S. & Dittmar, L. (2006). The unexpected benefits of Sarbanes-Oxley. Harvard Business Review. Retrieved August 11, 2011, from http://www.cbe.wwu.edu/dunn/rprnts.

SOXBenefits.pdf

Zhong, C. (2011). The Ethical Dangers of Deliberative Decision Making. Administrative Science Quarterly, 56, 1–25