Martha Stewart, Enron cases teach ethics in the classroom

“One of the best things that happened to business education was Martha Stewart,” said Robert Wyatt, director of the Breech School of Business at Drury University.

Stewart, who spent five months in prison after being convicted of four counts of obstructing justice and lying to the government about her sale of ImClone Systems Inc. stock in December 2001, is one of several segues college instructors are using to teach business ethics in the Ozarks.

Wyatt said Stewart’s case “allowed (instructors) to start fielding questions, like why would someone risk their empire over a very insignificant amount? There were students all of a sudden asking questions about what insider trading was. ... They had now heard about it in the press and knew about it before they walked in.”

At both Drury and Southwest Missouri State University’s College of Business Administration, ethics are woven into business courses through lectures, class discussions and guest speakers.

Textbooks include chapters on ethics. Some, Wyatt said, include a couple of homework problems at the end of each chapter dedicated to ethics, no matter the discipline.

George Swales, head of the finance and general business department at SMSU, said that with Enron and WorldCom in the not-so-distant past, class discussions encourage students to think about ethical dilemmas they may face after they have launched their careers.

“What I try to do is point out some ethical dilemmas and try to get the class involved in discussions on some of these dilemmas that are occurring, and to point out this is the kind of environment that exists out there and you have to be aware of it,” he said.

Open books

Rich Armstrong, president of Springfield-based The Great Game of Business, said that the Great Game’s speakers’ bureau often gives presentations at businesses and on campuses. Following the open-book management style taught by the Great Game, he said, helps keep everyone on the payroll functioning above-board.

“If more organizations would practice open-book management and sharing financial information, they will be more transparent and more highly visible to the entire organization, and a lot of things that happened to Enron in terms of the financial scandal may have been avoided if they were sharing information and the employees actually understood that information,” he said.

Other hot topics, Swales said, include what transpired prior to the passage of Sarbannes-Oxley and the 2000 Act of Fair Disclosure.

“What happens, for example, if a stockbroker has some inside information and how does he react accordingly?” he said.

Nature or nurture?

By the time students become upperclassmen, Swales hopes they have a firm

foundation on which to build their own sense of ethics.

“Either from a religious background or family circumstances or places where they’ve worked, interactions with students,” Swales said. “The mores and the way you were brought up certainly have an impact on an individual’s reaction to a specific situation, but hopefully you do the right thing.”

Wyatt added, “You can’t necessarily make people ethical, but you can set up your structure and your system so that it encourages ethical behavior by having a code of conduct ... by telling them what the penalty’s going to be, and by being sort of public advocates of that.”

The business environment plays a role in whether ethics can be learned, Armstrong said.

“I think good ethics is learned probably informally,” he said of businesses that provide an atmosphere of trust within the organization.

“Since the trust is there within the organization, why be unethical? It doesn’t really give them any environment to be unethical,” he added.

On the positive side

Wyatt added that he fears students might become jaded and believe there’s more unethical behavior than there actually is in the business world.

“I do have a bit of concern that all we hear about are all the cases of the unethical behaviors. The reality is, there’s a lot of people doing the right thing all the time, too,” he said.

There is no list of what to do and what not to do to remain ethical in the business world, Swales said.

“I’d love that to be the case,” he said, adding that students are required to learn guidelines and study legislation in the financial field.

“But, as so many other things, it

becomes a personal involvement at some point in time in the future that they will have to rely on not only the rules and regulations that are in place, but also their own judgment.”

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