Table Tennis for a Cause Issues Options Recommendations Senior Seminar in Finance

Issues What is (are) the problem(s)? Does Andrew have an obligation to act? 7/28/2019 Senior Seminar in Finance

Options Possible actions: Do nothing Resign immediately Talk to Gene Talk to Board President Talk to sponsor Call the IRS Call the police What framework should be used to determine best course of action? 7/28/2019 Senior Seminar in Finance

Decision criteria-”filter” Evaluate alternatives on the basis of: Creates or helps create a solution Retain firm reputation Retain Andrew’s job and reputation Is the legal, right, ethical thing to do Prevents future ethical situations 7/28/2019 Senior Seminar in Finance

Ethical Framework Vulnerable organization No real ethics code or practice in place Poor risk management controls Culture of aggressive growth in sales and profits Very high short term pay incentives linked to stock price, sales, or profits High levels of debt Market downturns reveal “cracks” 7/28/2019 Senior Seminar in Finance

Ethical Framework Vulnerable person Job stress and/or insecurity No prior consideration of ethical issues Existing conflicts of interest Failure to consider implications of situations and their consequences Failure to be aware of organization’s ethics policies and practice; haven’t identified the person to “talk to” if problems arise We’re all prone to “slippery slope” when facing ethical problems 7/28/2019 Senior Seminar in Finance

Ethical Framework A. a sure gain of $2,500 Consider this question: If faced with the following options, which would you choose? A. a sure gain of $2,500 B. a 25% chance of gaining $10,000, but a 75% chance of no gain 7/28/2019 Senior Seminar in Finance

Ethical Framework No consider this: If faced with the following options, which would you choose? A. a sure loss of $7,500 B. a 75% chance of a $10,000 loss, but a 25% chance of losing nothing 7/28/2019 Senior Seminar in Finance

Case Framework What is/are the case question(s)? What’s the proper approach/framework to answer case question(s)? Conduct the analysis, given approach/framework Make recommendation, providing support 7/28/2019 Senior Seminar in Finance