Home > FAQ > What is the difference between unethical and illegal business practices? Labour practices are often a hot topic from an ethical perspective, and labour laws tend to lag behind public opinion, leaving companies free to adopt legal practices that their clients and employees perceive as unethical. The payment of minimum wage to full-time employees is just one example. Although minimum wage is legal in an arbitrary employment contract, those working for minimum wage often cannot manage their daily expenses, leaving them in debt and bitter towards their employers. Another common example is legal cooperation with foreign suppliers whose working practices do not meet the ethical expectations of local clients. Until recently, the courts considered codes of conduct to be desirable for professionals in a particular field. Recently, however, some state courts have concluded that ethical rules have legal significance and that failure to comply with ethical standards can result in civil liability imposed by the courts, in addition to the discipline of the professional organization. Unfortunately, the courts do not consistently decide whether codes of conduct should be followed or followed. Some courts have accepted ethical rules as the norm and use rules to determine professional liability, while others reject them as mere propositions. So there is a form of supervision, but it is completely insignificant, and that was quite worrying for me. If I mentioned to the legal experts, does it not sound like the fox guarding the chicken coop because these lawyers appear in court according to the rules that they have written themselves? I mean, talk about Stigler.

This is the perfection of regulatory capture. It institutionalizes regulatory ownership. You control the whole process. You don`t even need to lobby anymore. They simply write the rules themselves, and then they argue under the rules they wrote themselves. It was quite shocking to me. When I asked people, I got answers like, “Well, that`s very technical.” To understand the difference between something that is “illegal” or “unethical,” we need to understand what those terms mean. “Unethical” defined as something that is morally reprehensible, while something that is “illegal” means that it is against the law. At the event, held in person at the Gleacher Center for the first time in two years, Hoang and Weitzman discussed unethical corporate behavior and how companies could be pushed to improve. Hi professor I am studying at UAE University and we take business ethics the professor said that we bring examples of ethical but illegal and unethical but legal issues you can give me something: On what general basis is something made illegal? Let us leave aside cases where unscrupulous legislators legislate solely for their own benefit or that of their friends.

In all legitimate cases of legislation, the law always has a moral purpose – usually either to improve people`s lives and make them safer (e.g., seat belt laws) or to protect an important right (e.g., food labeling laws). Some examples depend on the cultural context. Think of Singapore, where it is illegal to sell chewing gum, not because it is immoral, but to promote public cleanliness. And until recently, it was illegal for women to drive in Saudi Arabia, in part because it was considered religiously immoral. This is in stark contrast to Western customs, where driving is commonplace, and in the United States. It is a rite of passage for all 16-year-olds, including women. […] Rexall`s dubious homeopathic offerings. From Canadian Business and MSN. Because legal is not necessarily ethical. […] Kimberly Kay Hoang: I mean, I think there are people who see this as a kind of ultimate family sacrifice – that what they`re doing is ensuring prosperity for future generations, and that`s what they have to do to ensure that.

I think other people are drawing hard lines and saying I just don`t get involved. And so they create markets where there are no markets, so they stay away from the types of business transactions that are tied to the state, like natural resources, and instead of doing something like that, they go into technology where everything is just set up overseas. I mean, offshore hides both, but it also allows, by bypassing the state, to eliminate a lot of these types of shady deal brokerage as well, and that`s also part of the book story. Anyone who tells you, or simply implies, that everything legal is also ethical, is most likely engaging in self-serving rationalization. If this idea arises in the private sector, it is likely that someone will try to justify profitable behavior that is unethical but not yet illegal. When the same idea arises in academic circles, it is more likely that the self-interest they are trying to preserve is their own interest in avoiding the difficult work of determining which business behaviors are unethical and why. Imagine you`ve worked all your life and given your best years to a company. However, a few years before you want to retire, the company freezes the pension plan. Then, the year you`re ready to go out, they cancel the plan completely and give you a capital check instead of a lifetime retirement check.

The worst? It happens a lot and it`s completely legal. Many companies, including Enron, WorldCom and Tyco, have made history for their illegal practices related to creative accounting. However, not all creative and aggressive accounting methods are necessarily illegal. There is a wide range of ways a company can try to increase its bottom line, often just before the results are released. Some of these systems may include creative non-GAAP reporting, focus on IFRS results, lack of disclosure for problematic situations, share issuance and repurchase programs, timing of income and expenses, asset holdings and sales, pension plan planning, and promising use of derivatives. Hal Weitzman: I think it`s both. I actually think that what you just said is exactly what you just said. I`ve always thought, I mean, there`s a lot of academic literature in law, in jurisprudence, on whether there`s an upward or downward race.

I am not an expert on this. But I think what Kimberly said sums it up perfectly. It`s both because they measure different things. The race to the rise usually measures returns, and the race to the bottom usually measures standards. They are two different things. In fact, I could have worse standards and that will allow me to pay better dividends to shareholders, right? I mean, there`s been research on the Delaware effect, the Delaware dividend, and you can, I mean, if you think about it at a very basic level, the less you care about management and let them do their business, and the less control there is, the more opportunities there are to return capital to shareholders. Because you will not get involved in explaining to the legislator what the company code is. Or just take an example: If you were transporting a seriously injured person in a car at night and you ran into a red light and there was obviously no traffic, would you really stop or cross safely? That would clearly be illegal – would it also be unethical? I don`t think so.