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Business Ethics

Key Terms

Business EthicsKey Terms
business judgment rule
the principle that officers, directors, and managers of a corporation are not liable for losses incurred when the evidence demonstrates that decisions were reasonable and made in good faith
cap and trade
a system that limits greenhouse gas emissions by companies while allowing them to buy and sell pollution allowances
carbon footprint
the amount of carbon dioxide and other carbon compounds released by the consumption of fossil fuels
carbon tax
a pay-to-pollute system in which those who discharge carbon into the air pay a fee or tax
Citizens United
a 2010 Supreme Court ruling in favor of unlimited spending by individuals and corporations on political campaigns
Commerce Clause
an enumerated power listed in the Constitution giving the federal government the right to regulate commerce between states
corporate personhood
the legal doctrine holding that a corporation, separate and apart from the people who are its owners and managers, has some of the same legal rights and responsibilities enjoyed by natural persons
fiduciary duty
a very high level of legal responsibility owed by those who manage someone else’s money, which includes the duties of care and loyalty
limited liability
a business owner’s protection against loss of personal assets, granted with corporate status
moral minimum
the minimal actions or practices a business must undertake to satisfy the base threshold for acting ethically
quid pro quo
the tradeoff someone makes in return for getting something of value; from the Latin meaning this for that
Sarbanes-Oxley
legislation passed in 2002 that mandates reporting transparency by businesses in areas ranging from finance to accounting to supply chain activities
shareholder primacy
a company’s duty to maximize profits for stockholders
states’ rights
a view that states should have more governing authority than the federal government, based on the Tenth Amendment, which reserves to the states any right not specifically delegated to the federal government
sustainability
a long-term approach to the interaction between business activity and societal impact on the environment and other stakeholders
tragedy of the commons
an economy theory highlighting the human tendency to use as much of a free natural resource as wanted without regard for others’ needs or for long-term environmental effects or issues
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