Due to the rampant cases of corporate espionage, laws have been put in place around the world to dictate the code of ethics to be adhered to by companies to prevent their collapse as a result of corporate fraud and mismanagement. In most cases, when there are scandals due to illegal business deals went sour is when most companies call on the government to enact regulatory laws to protect them from these predicaments. The laws are made when there are cases of fraudulent activities or when previous laws are deemed as having loopholes which need to be sealed. The other reason for the ethical legislation is the dynamic nature of the business world which calls for enactment of new laws from time to time to suit the developments of businesses regarding growth and innovations. These legislations are warranted by the nature of humans which call for the enactment of laws which ensures that people practice their businesses in fairness and honesty (Owens, 2013)
Legislation of ethics gives a moral direction to businesses and people on how they are to run their activities in a manner that is deemed acceptable to all. The laws play a crucial role in clearly separating the rights and wrongs as regards ethical conducts. These laws serve justice to all in an equal measure despite being viewed by some as discriminatory. These laws provide a level ground for carrying out business activities and cuts across all parties involved including consumers, employees, employers, and investors (Owens, 2013).
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An example of one such business law is the Sarbanes-Oxley act of 2002 (SOX) which consist of eleven sections and five of which carry more weight regarding compliance with the law. This law has used in the United States has greatly reduced cases of corporate mismanagement and fraud in the US by holding to account senior leadership of an organization and the people responsible for the finances of the organizations regarding their way of handling the financial affairs of the company and the information shared with the public. The ethical legislations impact on ethical decisions owing to the consequences associated with failure to adhere to the laws (Findlaw, 2002, p. 6-8).
References
Findlaw. (2002). One hundred seventh congress of the united states of america. Retrieved from http://news.findlaw.com/cnn/docs/gwbush/sarbanesoxley072302.pdf
Owens, E. C. (2013). Can ethical business behavior be legislated. Senior honors theses(management) , 2-7. Retrieved from http://commons.emich.edu/cgi/viewcontent.cgi?article=1000&context=mgmt_honors
