Corporate Social Responsibility - Essay Example

Should business take a cut in their profit margins in order to employ the jobless people or take part in environmental conservation practises? The answer to this question can be answered by analysing the long run effects of such a move to the business. When a business entity takes a cut in order to participate in corporate social responsibility, the earnings of the owners are reduced, this may have the effect of dampening their interests on the business or they may pressurize the chief executive officer of the business to make more profits for them.

In turn, this would have the effect of increasing the prices of the goods and services that the company produces therefore a negative effect to the consumers, which the company was trying by getting involved in corporate social responsibility activities. Corporate social responsibility among business entities means that the business is getting money from consumers of their products and other stakeholders and spending it on their choice project without necessarily consulting the financiers of the whole project since the decision of the project lies wholly on the chief executive officer and the board of directors. . Financial fraud has been with us for a relatively long period of time where corporates have been tampering with their financial information to lie about their financial position in order to attract investors or to keep investors from investing in other rival firms.

This has the effect of making investors lose billion of money when these companies collapse. For instance, Enron, Tyco, Worldcom and Adelphia have been involved in financial scandals involving manipulating of their financial information. Another form of financial fraud involves employees who are torn between pursuing their own selfish interests or the interests of their clients. For instance, brokers in insurance of money market are usually faced with the dilemma of pursuing their own selfish gains at the expense of the client’s interests although the law requires them to pursue their clients’ interests before their own.

This trend is caused by the commission remuneration system that is used to pay brokers based on the volume of business that they transact. Consumers are also involved in fraud, which cost the United States economy billions of dollars in revenue. The fraud from consumers is spread across almost all sectors of the economy, however the most hit sector is the insurance sector, which is reported to have lost about 10 per cent of the total claims to fraud, this includes claims on items that are not lost or damaged and treatment that is not offered.

The clothing sector is another worst hit by fraud with estimates showing that about 16 billion dollars may have been lost in 2002 due to ‘wardrobing’ which is the returning of old clothes. Another area