PROFESSIONAL RESPONSIBILITY:
MARKETS, ETHICS & LAW (B02.3101.W2SP 08)
Spring 2008
DATES: January 3,8,10,15 AND Sunday 1/6 9-4 P.M.
TIME: 6:00 P.M.-9:00P.M.
ROOM: KMC
PROFESSOR Barbara Holt
q Office: 3 KMC 10th Floor
q Office Hours: before & after class, & by appointment.
q Phone: 212-998-0049
q Fax: 212-995-4230
q E-Mail:
q Secretary: or 212 998-0048
q Teaching Assistant: Gur Roshwalb
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COURSE OBJECTIVES
The purpose of this course is to introduce you to a broad range of “non-market” issues encountered by managers and business professionals, and to help you develop a set of analytical perspectives for making judgments when such issues arise. In economics many of these issues can be described as market failures. To a limited extent, we will illustrate how the legal system is used to redress such failures of the market economy. We will also examine the role of ethical norms and reasoning in resolving issues in managerial life, and in establishing standards of professional responsibility.
More directly, in this course you will exercise professional judgment through discussion and analysis. Most such exercises will require the analysis of one or more cases, as indicated on the attached schedule of class assignments. In addition, we will study writings in the fields of ethical reasoning, professional responsibility, and the law. We will also look at recent examples in the news and try to understand what happened and why.
There is no formula or easy answer to some of the situations you will encounter. There are many pressures you may feel in certain aspects of your work and the objective of this course is to sensitize you to this and emphasize the role good judgment will play in making tough decisions throughout your career. We will have a number of guests throughout the course who will share their experiences and perspectives.
PROFESSIONAL RESPONSIBILITY COURSE PACK
Required Cases & Readings 2007-2008
All required cases and readings for this course are located in TWO SEPARATE places: Your Professor’s Blackboard Page (free) AND a Xanedu Course Pack (purchase).
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1. BLACKBOARD
On your professor’s Blackboard page you will find the Professional Responsibility Cases and Readings 2007-2008 posted under the Course Information link together with a Table of Contents.
2. XANEDU.COM
On Xanedu.com you will find additional required readings for Professional Responsibility. To access these readings you will need to purchase a Xanedu access code from the NYU Professional Bookstore.
Online ordering instructions for the Xanedu material:
Go to the NYU Book Store web site: http://www.bookstores.nyu.edu
Click on the "Search for a Book" link
Select the "Search by ISBN" option and enter ISBN 978300047318B
Proceed to Checkout and complete your order.
Within one business day of completing your order you will receive an email with your Key Code that will give you access to your digital course pack.
Tax and shipping charges will be removed before your credit card is charged.
How to access your Xanedu Course Pack
1. Open a Web browser and go to www.xanedu.com.
2. ALREADY A REGISTERED XANEDU USER?
Log in to go to your My Xanedu page. At the bottom of your My Xanedu page is a field labeled ‘Do you have a key for a Course Pack or ReSearch Engine?’ Enter the 16-digit key shown below, including the hyphens, into this field and click ‘Go’.
3. NOT A REGISTERED XANEDU USER?
You’ll need to register and create a user name and password. Click the Register link under the “Students” login area on www.xanedu.com. Click the button labeled ‘Student Registration’. Complete the online registration form. Enter the 16-digit key shown below, including the hyphens, at the bottom of the form. Submit the form. Your My Xanedu page is displayed.
4. Select your Course Pack from the My Course Packs list and click ‘Go’.
Important things to know about the key and your digital Course Pack
· You can enter the numeric key shown above only one time. If you have a problem or question, call Xanedu Customer Service at 800-218-5971, Option 3, or send email to .
· Access to your digital Course Pack cannot be resold. Once you enter the numeric key, only you can access the Course Pack.
· You will have unlimited access to your digital Course Pack until whichever comes first:
six months after the date of purchase,
Or two months after the last day of your course (as specified by your instructor).
· To access your Course Pack at anytime:
1. Open a Web browser and go to www.xanedu.com.
2. Log in with your user name/password combination.
3. Select the Course Pack from the My Course Packs list on your My Xanedu page.
4. Click ‘Go’.
Problems?
Contact
PREPARATION FOR CLASS
Each class session consists of several study modules. Each study module contains readings and study questions. Your primary obligation in this course is to prepare for class discussion by thorough reading and analysis of assigned materials. Class discussions and in-class activities are an essential part of the course. All students are responsible for mentally preparing answers to all of the study questions before coming to class.. You should expect to be called upon during class to provide answers to these study questions.
3. COURSE REQUIREMENTS
1. Attend all 6 scheduled class sessions.
2. Homework: 3 Written Study Questions (2 - 3 pages each). Pick ONE study Question out of the assigned readings for three of the five classes.
3. Homework assignments due prior to the class meeting Email to Gur prior to the beginning of each class. WILL BE SET UP AS ASSIGNMENT IN BB
4. Term Paper Description (1 page).
5. Term Paper (6-10 pages).
4. ATTENDANCE
There are only 6 sessions for this course. Therefore, you are required to attend all sessions in their entirety including Sunday January 6th. Attendance will be taken. If you do not attend all 5 classes, you will not receive credit for the course. If, due to work or personal circumstances, you doubt your capacity to attend all 5 classes then you should drop this section and register for another.
GRADING
The weights for the student’s overall grade are:
Class Participation 20%
Homework: Written Study Question Analysis 40%
Term Paper Project 40%
HOMEWORK: WRITTEN STUDY QUESTION ANALYSIS (2 to 3 pages typed)
DUE: Sessions 1/6, 1/10, 1/15
Each student should perform a written analysis for XX study questions over the course of the term. That is, for 3 sessions of his or her choosing the student should write out his or her analysis of any one of the assigned study questions. These analyses should be 2-3 pages in length. The student can submit more than XX written analyses, but only the top XX grades will count.
TERM PAPER DESCRIPTION: (1 page typed)
DUE: Session 1/8
A one-page description of your term paper project as described below.
TERM PAPER PROJECT: (6-10 pages typed & double-spaced)
DUE: No later than 1/22
The purpose of this paper is to allow you to apply principles of professional responsibility to an actual, specific business situation. You should describe a situation with which you have first-hand familiarity. The student may have been a major or minor actor in the situation, or may have merely witnessed the situation. In any event, the requirements are that the situation raise ethical or legal issues and that the student was there. It would not be appropriate to analyze a situation if you were not in a position to observe it directly.
Organize the term paper as follows:
I. Situation
Provide a description of the situation or practice; this description must be detailed and rich enough to allow the reader to get a clear sense of the issues and circumstances (2-3 pages).
II. Analysis
Apply some method or methods of ethical (or perhaps legal) reasoning to the situation and examine the results of this application. Are the results logical, beneficial, counter intuitive, or in any other way problematic? Here you should apply, wherever appropriate, concepts from the course and its readings. Also, cite the relevant law (2-4 pages).
III. Resolution & Conclusion
Describe how the situation was actually resolved. Discuss this resolution in light of the ethical analysis from section II. In looking at the situation now in hindsight would you have made a different decision. If so, why? (2-4 pages).
Evaluation of Term Paper Project: Good performance (hence good grades) on this assignment consists of systematically and thoroughly applying relevant concepts and methods from the course to the situation, and in testing the worth of those concepts and methods in resolving the ethical issues it presents.
Confidentiality of Term Paper Projects:
The contents of the term paper projects that you submit are held strictly confidential. The term papers are not read by anyone other than the professor and are not disseminated in any fashion to other person(s).
COURSE SCHEDULE TOPICS & ASSIGNMENTS
SESSION #1
DATE: January 3rd
MARKET FAILURES & PROFESSIONAL DILEMMAS
READINGS Course Pack
Economic Theories of Regulation: Normative vs. Positive” / Linda N. Edwards & Franklin R. Edwards / Course ConceptsPeter Drucker Article / Blackboard
Course Documents
The Price of Lobster Thermidor / The Economist
http:/www.suboceansafety.
org / Moral Standards Across Borders
Pollution Case Highlights Trend to Let Employees Take the Rap.” / Dean Starkman / Control By Law
Making An Ethical Decision / Terry Halbert & Elaine Ingulli / Course Concepts
STUDY QUESTIONS
1. Why do market failures tend to bring about laws or regulations to counter their effects?
2. Based on the Edwards article which market failures or imperfections are present in the “Lobster Thermidor” (The Economist) case? In the “Pollution” (Starkman) case?
3. How might ethical methodology help an executive or legislator to make more effective decisions in the presence of market imperfections?
4. Based on the Halbert & Ingulli reading identify at least one market failure related to your employment situation and apply the methods of ethical reasoning to this market failure.
TRUTH & DISCLOSURE
READINGS Course Pack
Bluffing / Jim T. Priest / Course ConceptsBitter Pill / Ralph T. King, Jr / Truth & Disclosure (“Truth”)
Familiar Refrain: Consultant’s Advice on Diversity was Anything but Diverse / Douglas A. Blackmon / “Truth”
Today’s Analyst Often Wears Two Hats / Roger Lowenstein / “Truth”
Double Agents in the Financial System
/ Roy C. Smith / “Truth”
The Numbers Game / Arthur Levitt / “Truth”
You Have The Only Hard Copy / Peter Elkind / “Truth”
Ghost Story / Anna Wilde Mathews / “Truth”
STUDY QUESTIONS
1. Would a “Bluffer” (Priest) voice any objections to the (i) corporate actions of Boots described in “Bitter Pill” and (ii) Towers Perrin in the “Familiar Refrain” case? Do you agree with Carr? Can you identify any market failures in “Bitter Pill” and “Familiar Refrain”?
2. How would Arthur Levitt (“The Numbers Game”) assess the long-term effects of bluffing as applied to (i) the job of an equity analyst (“Today’s Analyst”) and (ii) the criteria for revising a stock ratings system discussed by Hoffman (“You Have the Only Hard Copy”)?
3. Is there anything ethically wrong about the actions of the medical ghostwriters as described in “Ghost Story”? What would happen if all or most drug companies behaved in similar ways? Do their actions fall within the scope of business bluffing according to Priest?
SESSION #2 SUNDAY
DATE: January 6th A.M.GIFTS, SIDE DEALS & CONFLICTS OF INTEREST
READINGS Course Pack
Neutral Omni-Partial Rule Making / Ronald M. Green / Course ConceptsBribery & The Foreign Corrupt Practices Act / http://www.usdoj.gov/criminal/fraud/docs/dojdocb.html / Gifts, Side Deals & Conflicts of Interest (“Gifts”)
Buynow Stores / Bruce Buchanan / Gifts
Roger Berg / Ronald M. Green / Gifts
Wall Street and the Nursery School / Gretchen Morgenson & Pat McGeehan / Gifts
Hat Trick / Gretchen Morgenson / Gifts
A Bribe by Any Other Name / Neil Weinberg / Gifts
Marsh & McLennan Companies / Ingo Walter / Gifts
Drug Maker’s Efforts to Compete in Lucrative Insulin Market are Under Scrutiny / Gardner Harris & Robert Pear / Gifts
STUDY QUESTIONS
1. Make a list of all the gift practices described in Buynow Stores. In your judgment, which of these, if any, are inappropriate? Use ethical concepts and methods from the Green and Halbert/Ingulli readings to support your position.
2. Do the Roger Berg and Wall Street Nursery School cases differ materially from Buynow Stores? Use ethical concepts and methods from the Green and Halbert/Ingulli readings to support your position.
3. Has Novo Nordisk and their “anchor in office program” created any market failures or engaged in any conflicts of interest in their current insulin drug marketing practices (“Drug Makers Efforts to Compete in Lucrative Insulin Market Are Under Scrutiny”)? Are the Novo sales representatives engaging in bribery? Should drug companies refrain from such activities and risk losing business?
4. What was Marsh & McLennan’s exposure to reputational risk versus Putnam’s profits from the firm’s allowing hedge funds to engage in late trading and market timing? If you conclude that the risks exceeded the returns, why did the firm engage in the practice?
AGENCY & FIDUCIARY DUTY
READINGS Course Pack
Disloyal Agents / David Cavers / Agency & Fiduciary Duty(“Agency”)
Moral Hazard / Robert Pindyck & Daniel Rubenfeld / Course Concepts
Quality Department Stores / Lawrence Zicklin / Agency
Old City Enterprises / Lawrence Zicklin / Agency
The Business Judgment Rule & The Duty of Care / Constance Bagley & Diane Savage / Board of Directors
The Man Who Paid the Price for Sizing Up Enron / Richard A. Oppel, Jr. / Agency
Plasma International / TW. Zimmer & P.L.Preston / Agency
You Bought, They Sold / Mark Gimein / Agency
My Patients Are Dying / Lawrence Zicklin / Agency
At The Center of Fraud, WorldCom Official Sees Life Unravel / Susan Pulliam / Agency
STUDY QUESTIONS
1. Sketch out the relationships between parties described or implied in the case
“Quality Department Stores” Which of these can be called “fiduciary” relationships according to Cavers (“Disloyal Agents”)? Given your analysis, how should the investment manager vote?