This is “Codes of Ethics and Codes of Conduct”, section 6.8 from the book Governing Corporations (v. 1.0). For details on it (including licensing), click here.

For more information on the source of this book, or why it is available for free, please see the project's home page. You can browse or download additional books there. You may also download a PDF copy of this book (527 KB) or just this chapter (86 KB), suitable for printing or most e-readers, or a .zip file containing this book's HTML files (for use in a web browser offline).

Has this book helped you? Consider passing it on:
Creative Commons supports free culture from music to education. Their licenses helped make this book available to you.
DonorsChoose.org helps people like you help teachers fund their classroom projects, from art supplies to books to calculators.

6.8 Codes of Ethics and Codes of Conduct

In 2003, to implement sections 406 and 407 of Sarbanes-Oxley, the SEC adopted a rule requiring a company to disclose whether it has adopted a code of ethics that applies to the company’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A company disclosing that it has not adopted such a code must disclose this fact and explain why it has not done so. Companies also are required to promptly disclose amendments to, and waivers from, the code of ethics relating to any of those officers.

A code of ethicsA code of conduct, a statement of business practice, or a set of business principles that establish and articulate a company’s values, responsibilities, obligations, and ethical ambitions. (code of conduct, statement of business practice, or a set of business principles) is useful for establishing and articulating the corporate values, responsibilities, obligations, and ethical ambitions of an organization and the way it functions. It provides guidance to employees on how to handle situations that pose a dilemma between alternative, right courses of action or when faced with pressure to consider right and wrong.

A good code of ethics should be signed by the CEO and endorsed by the board of directors; it should focus on the values that are important to top management in the conduct of the business, such as integrity, responsibility, and reputation, and demonstrate a commitment to maintaining high standards both within the organization and in its dealings with others.

A good example is the code of ethics authored by Buffett for Berkshire Hathaway directors, executives, and employees, with his now famous advice:

I want employees to ask themselves whether they are willing to have any contemplated act appear the next day on the front page of their local paper—to be read by their spouses, children and friends—with the reporting done by an informed and critical reporter.Web site of Berkshire Hathaway, available at http://www.berkshirehathaway.com.