icac leadership forum 2005, k. s. maurice tse, hku leadership forum 2005 workshop ii: creating an...
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icac leadership forum 2005, k. s. maurice tse, hku
Leadership Forum 2005 Workshop II: Creating an Ethical Asset Business Education for Creating an Ethical Asset
K. S. Maurice TseAssociate Dean
Faculty of Business and EconomicsUniversity of Hong Kong
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ContentA. Objectives of business ethics education
What do students want to get out of business ethics education?B Challenges
Can business ethics be taught, or learned? Cultural differences Experience sharing
C. The Core Operating System What business schools don’t always teach? Essential elements and root qualities of an ethical business
leaderD. Environment for Creating an Ethical Individual
Regulatory and law enforcing bodies Business Community University/Faculty/Department
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A. Objective of business ethics education
To foster and promote among students their awareness of the crucial elements for ethical decision-makings.
Ethics and ethics-related courses offered to both MBA and Undergraduate Students. Practices and activities that are considered
importantly right and wrong Rules that ought to govern those activities Values embedded, fostered, or pursued by those
activities and practices Character traits deserving development in life
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A. Objective of business ethics education
Ask our students what they want to get out of business ethics education?
In general, their responses can be classified into (not in order of importance): In the process of maximizing profits,
Be able to identify and signal morally relevant elements in business situations (moral sensibility)
Be able to give convincing moral reasons for decisions and action (moral reasoning)
Be aware of moral elements and willing to apply moral sensibility and reasoning to specific situations (moral conduct)
Be able to support peers and to direct subordinates in morally relevant situations (moral leadership)
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B. Challenges
Can business ethics be taught, or learned?
Cultural differences Experience sharing
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B. Challenges
Can business ethics be taught, or learned? Yes, students can learn. We can help promote their awareness.
Case analysis Lectures Questions for discussion to foster experience
sharing News
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Cases: Corporate Accountability List of US Companies in TroubleCOMPANY ISSUE AUDITOR
Adelphia Whether it failed to properly disclose $3.1 billion in loans and guarantees to its founder's family.
Deloitte & Touche
Bristol-Myers Whether the company improperly inflated revenues by as much as $1 billion through use of sales incentives.
PricewaterhouseCoopers
CMS Energy Disclosed it overstated revenue in 2000 and 2001 by including artificial 'round trip' energy trades.
Andersen
Computer Associates
Whether it artificially inflated revenue and improperly rewarded top executives.
Ernst & Young
Dynegy Whether its 'Project Alpha' transactions served primarily to cut taxes and artificially increase cash flow.
Andersen
Elan
Acknowledged that it created 55 joint ventures to shift some research and development expenses off its income statement, while at the same time recording technology licensing fees from the off-balance sheet entities as contract revenue
KPMG
Enron Admitted it improperly inflated earnings and hid debt through business partnerships.
Andersen
Global Crossing
Whether it sold its telecom capacity in a way that artificially boosted its 2001 cash revenue.
Andersen
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Cases: Corporate Accountability List of US Companies in Trouble
COMPANY ISSUE AUDITOR
Halliburton Whether it improperly recorded revenue from cost overruns on big construction jobs.
Andersen
ImClone Systems
Former CEO Samuel Waksal charged with insider trading.
KPMG
Kmart
Says the SEC is investigating its accounting and other practices. The company investigated whether it improperly accounted for vendor allowances, and since changed its practice.
PricewaterhouseCoopers
Lucent Technologies
Adjusted fiscal 2000 revenues by $679 million, spurring SEC investigation. Agency also investigating whether vendor-financing played an improper role in its sales.
PricewaterhouseCoopers
Merck
Revealed in an SEC filing that it recorded $12.4 billion in revenue from the company's pharmacy-benefits unit over the past three years that the subsidiary never actually collected.
Until March 4, 2002: Arthur Andersen. Currently:
PricewaterhouseCoopers
MicroStrategy
Settled without admitting wrongdoing an SEC suit accusing it of backdating sales contracts to meet quarterly financial estimates, among other improper revenue-recognition practices.
PricewaterhouseCoopers
Network Associates
Whether it hid expenses or overstated revenue from 1998 to 2000.
PricewaterhouseCoopers
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Cases: Corporate Accountability List of US Companies in Trouble
COMPANY ISSUE AUDITOR
PNC Financial Services
Restated its 2001 results by $155 million after regulators raised concerns about how PNC accounted for a transfer of loans.
Ernst & Young
Qwest Whether it inflated revenue for 2000 and 2001 through capacity swaps and equipment sales.
Andersen
Reliant Resources
Admitted it inflated revenue by counting artificial 'round trip' energy trades.
Deloitte & Touche
Rite Aid Acknowledged overstating net income by $1.6 billion. Former executives are charged with inflating earnings to reap rewards tied to financial performance.
KPMG
Tyco International
Whether it improperly created 'cookie jar' reserves that were supposed to cover merger costs but instead were drawn on to boost profits; and whether it improperly 'spring-loaded' earnings from acquisitions by accelerating their pre-merger outlays.
PricewaterhouseCoopers
Vivendi Universal
Under investigation by French securities regulators to determine whether the firm's board withheld information about short-term liquidity troubles. The probe follows news that the firm tried and failed to obtain favorable accounting treatment for a complex transaction involving British Sky Broadcasting shares last year.
RSM Salustro Reydel
WorldCom
Admitted to improperly booking $3.8 billion in expenses as capital expenditures. SEC is also examining whether it used questionable methods to book sales, classify assets and account for debts it couldn't collect.
Andersen
Xerox
Fined $10 million without admitting or denying wrongdoing for inflating revenue and profits from 1997 to 2000 by including future payments on existing contracts.
KPMG
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Financial Frauds of
Listed Companies in
Hong Kong
Excerpts from Sing Pao May 3, 2004
上 市 公 司 出 事 事 件 簿 日 期 公 司 事 件 30-11-2004 創維 數碼(751) 主席黃宏生等董事被廉署拘捕,及後被控
盜取公司資金。 23-11-2004 和寶國際 (039) 集團主席黃楚和等人被廉政公署調查,及
後被控 7項盜竊罪及一項虛假陳述。 9-7-2004 先科國際 (724) 主席黃創光等人因涉嫌行賄兩名証卷分析
員,撰寫有利公司報告,被廉政公署拘捕。
17-6-2004 遠東生物制藥(399) 傳有股東被斬倉,股價大瀉 92%,港交所因未能聯絡管理層而遭勒令停牌,主席蔡崇真 更因涉私印增值稅發票而被捕,該股及後更進入臨時清盤狀態。
26-2-2004 廣興國際 (1131) 及 利來控股(221)
廣興 執行董事 李萬德 被廉政公署 拘捕,被指賄賂多名基金經理 及瑞銀華寶分析員,在相約時間,消息傳出李來高層被捕,事涉配股事宜中貪污而被捕 。
5-2-2004 艾 克國際 (8179) 股價連跌多日,辦事處人去樓空,聯交所無法聯絡管理層,該股被勒令停牌至今。
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Lecture Question: When faced with an ethical issue, whether at
home or abroad in a different cultural setting, how should we go about trying to resolve it?
Just whose ethical framework should we use? Our own, the counterparty’s, the host country’s,
or some compromise? Answer?? Very often, very difficult
Different Theories Concept of cultural relativism Concept of cultural absolutism Relatively new approach by Donaldson and Dunfee
(1999): Integrative Social Contracts Theory (ISCT)…. Ethics as constraints in profit-maximizing formula Pareto-Optimality notion
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Questions for Discussion & Experience Sharing
1. Is business ethics always more important than profits?
2. What would you do in this situation? If you act ethically, you would lose a big deal, and if
you act otherwise, you would win it.3. Would you take a bribe, when all the people around
you take such a practice for granted?4. For which industry is it easiest to conduct business
on a high ethical level ? 5. How would you rank the following professionals in
terms of ethical conduct and trustworthiness? Why?Lawyers; Scientists; Managers; Judges; Medical Doctors; Priests; Entrepreneurs; Accountants; Engineers; Journalists; Police.
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Questions for Discussion & Experience Sharing
The result of an “Ethics Survey” conducted on HKU post-graduate students in 2003 and 2004 is as follows:
Scientists 95%; Medical Doctors 86%; Judges 80%; Priests 70%; Engineers 62%; Accountants 61%; Journalists 57%; Police 48%; Managers 42%; Entrepreneurs 39; Lawyers 37%.
More recently, HKU Career and Placement Centre have learnt from the major employers in Hong Kong that they would place “unyielding integrity” at the top of required managerial attributes.
Why, when the need for ethics/integrity is considered to be so important by the society, do you rank managers so low for ethical behavior? And why does respect for managers appear to be on the decline?
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C. The Core Operating System
What business schools don’t always teach?
Essential elements and values of an ethical business leader
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What the many MBA Programs in the world teach and DON’T’ always teach you
HKU Framework for Entrepreneurship by Mr. Po Chung and Dr. Saimond Yip of the Centre for Asian Entrepreneurship and Business Value
Please visit www.casebv.com for the full article.
©
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What the many MBA Programs in the world teach and DON’T’ always teach you
仁 : kindness 義 : righteousness 禮 : respect 智 : wisdom 信 : trustworthiness 忠 : loyalty 勇 : courage 廉 : uncorrupted-ness 恥 : shame 孝 : care for the old 悌 : care for the young 改 : self-correction 恕 : forgiveness
Root Qualities (根 器) ?? 13 confucian virtues:
©
Some Root Qualities:
•Minimum Passion, focus & dedication
•Minimum luck/blessing factor & health
•Minimum risk tolerance & sleep factor
•Minimum guts & stamina
•Minimum IQ & EQ
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What the many MBA Programs in the world teach and DON’T’ always teach you
仁 : kindness 義 : righteousness 禮 : respect 智 : wisdom 信 : trustworthiness 忠 : loyalty 勇 : courage 廉 : uncorrupted-ness 恥 : shame 孝 : care for the old 悌 : care for the young 改 : self-correction 恕 : forgiveness
Chinese Virtues Can they be taught in classroom? Probably Probably not They are usually “acquired”, not
“taught” Many are born with these qualities Others acquire them naturally in
their upbringing Some suddenly get it through an
“enlightenment experience” e.g. similar to a religious or philosophical conversion.
Experiential learning may help (e.g. adventure-based learning).
Our objective: Give them a chance, make them aware,
Turn these virtues into viruses
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What the many MBA Programs in the world teach and DON’T’ always teach you
1. 80%2. 90%3. 97%4. 86%5. 95%6. 100%7. 85%8. 94%9. 65%10. 42%11. 42%12. 65%13. 84%
Repellant characters destroy trust and credibility Ask students. “Would you follow people who are infected with the
following viruses??
1. Unkind to you2. Unfair to you3. Rude to you in front of others4. Do stupid things and get you in
trouble5. Lie to you6. Betray you7. Leave you to face the music8. Corrupt9. Have no sense of shame10. Bad to their parents11. Bad to their brothers and sisters12. Refuse to correct their mistakes13. Hold a grudge against you for months?
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D. Environment for Creating an Ethical Individual
Regulatory and law enforcing bodies Business Community University/Faculty/Department
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D. Environment for Creating an Ethical Individual
Regulatory and law enforcing bodies Talks, lectures, seminars, given by
representatives from ICAC, and Police. Seminars on code of ethics and ethical
behaviors given by representatives from the professional bodies in accounting, law, and engineering etc.
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D. Environment for Creating an Ethical Individual
Business Community Other than providing a return to shareholders,
business nowadays is charged with other tasks as well:
Acting lawfully, producing safe products and services at costs commensurate with quality, minimizing negative social and environmental impacts etc.
Students often have to deal with complex dilemmas in global, social, political, ecological, and ethical issues in business.
For purpose of education, good and ethical corporate DNAs can be better spread/transmitted to our students through student projects and internship.
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D. Environment for Creating an Ethical Individual
University/Faculty/Department Plagiarism among university students in Hong Kong,
including undergraduate and research (Up to Apr 15, 2005).
At HKU: Time and again students who appeared before the
University Disciplinary Committee alleged that they did not know what constituted plagiarism.
Policy and guidance needed on what constitutes plagiarism, why it is wrong, and how to avoid it.
2001/02 2002/03 2003/04 2004/05*
33 41 66 22
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On Plagiarism Pamphlet to all students. Also available on the University's
website: http://www.hku.hk/plagiarism.
Regulation 5 of the University's Regulations Governing Conduct at Examination provides:
"A candidate shall not engage in plagiarism nor employ nor seek to employ any other unfair means at an examination or in any other form of work submitted for assessment as part of a University examination. Plagiarism is defined as the unacknowledged use, as one's own, of work of another person, whether or not such work has been published."
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Pamphlet on Plagiarism What is Plagiarism* ? Introduction
In this University, plagiarism is a disciplinary offence. Any student who commits the offence is liable to disciplinary action. …
What constitutes plagiarism? The most common form of plagiarism What is proper acknowledgement? Paraphrasing or adopting an idea or an argument How much plagiarism is plagiarism? What if the footnote is also copied? Does it matter that what is copied is factual information only? Can I avoid plagiarism by making minor alterations or adding
some remarks of my own? I didn't intend to cheat.... How to avoid plagiarism? A Matter of Integrity, Creativity and Originality
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On Plagiarism I don't know what plagiarism is. No
one has told me about it before. “Ignorance of the law is no defence, for
otherwise anyone can choose not to know the law and have a defence in committing an offence. The same applies to plagiarism. The offence is defined in the University regulations. Many departments have also provided further guidelines on what plagiarism is. After all, it is a simple concept of copying without proper acknowledgement. At the university level, if you do not know what plagiarism is, it is your duty to find it out, instead of just waiting to be told.”
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Plagiarism-Sanction Plagiarized work will almost certainly receive a lower or fail grade. Other possible disciplinary action:
A warning letter for case of minor plagiarism. More serious cases, the students concerned will be referred to the Vice-
Chancellor for referral to the University Disciplinary Committee for disciplinary action.
Disciplinary Committee, which comprises 3 members from the Senate and 2 student members, will investigate the complaint and may impose a wide range of penalties once a student is found guilty of a disciplinary offence.
Penalties include a published reprimand, suspension of study for a period of time, and even expulsion from the University.
If a student is expelled, he will probably never be able to re-enroll in this or indeed any university.
Disciplinary action may be taken even after graduation, particularly in the case of research students who commit plagiarism in their thesis or dissertation.
If a student lends his work to another student for copying, both students will be punished.
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Ethical Behaviors Experience Sharing Case 1: HKU IMBA students in Shanghai 2003/04. With the help of plagiarism-detecting software, three
students were caught having committed plagiarism by means of:
Copying works done by another student Copying straight off the websites. Copying articles without acknowledge
Usual defense arguments as listed above and before. Appeal to the Dean of School of Management and the President
of Fudan University . Final judgment by HKU irregardless of the appeals to the other
side: All three students received a fail-grade for the course and had to retake it; warning letter.
Case 2: MBA applicants in Hong Kong 2003/04. Two applicants were caught having lied about their salary
figures in their application forms. Dismissed before enrolment.
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Conclusion Law, regulations and market forces are
necessary, but insufficient guides and guarantees for ethical conduct.
We have to start from education actively engaging support by government, law-enforcing bodies, and the business community.
Root Qualities !! Virtues versus Viruses !!!