Wall Street wonders

Stockholders and business students alike have been able to watch economics in action this summer. But the stock market these days those economics are more than a mere fluctuation -- the economy has bottomed out faster than Michael Keaton's career. The Dow Jones Industrial Average has dropped 23.1 percent and the Standard and Poor's Index has shaved off 30.5 percent since January. The changes are partly due to decreasing investor confidence in companies with fraudulently inflated corporate earnings. Hiring freezes have been put in place at many companies. The government is investigating greater numbers of new corporations and Wall Street investment firms with each passing day. One Wharton undergraduate recently described the business environment in his own Wall Street experience -- "I work in my finance internship for thirty hours at a time sometimes, curled up under my cubicle, missing out on a proper social life in New York, not to mention my daily allotment of vitamins and minerals... and now I could be going to jail for it."

This realization is a good thing. Finance and Accounting concentrators are not generally prone to extensive soul searching. But in light of the recent scandals at Anderson, Enron, WorldCom, Tyco, and Martha Stewart Living, students have been paying closer attention in Wharton classes that address corporate governance, regulation of financial markets, and white collar crime. And I, for one, am glad that they are. It is comforting to know that my peers, whom I may someday rely upon for financial advice, will think twice before they attempt to defraud me -- or my 401K plan.

As one of the best business schools in the world, students should be able to tap into the wealth of knowledge available, particularly regarding business ethics. In the past month, Finance Professor Jeremy Siegel has given market analyzes to The New York Times; William Laufer, a Legal Studies professor has been working with the UN Global Compact and the World Bank, and Wharton Professor Thomas Donaldson testified before a US Senate Judiciary Committee Hearing. Wharton Undergraduate Dean Thomas Dunfee was an ethics consultant to the now defunct Auditor Independent Standards Board and Wharton professors Alan Strudler and Nien-he Hsieh have published materials on corporate fraud and corporate governance. Fortunately, Ethics courses have been offered at Wharton since 1975, and Legal Studies 210: Corporate Responsibility and Ethics is known to be very popular among students, often found to have six or seven sections over-enrolled.

Thankfully, Wharton may be instituting some subtle changes in response to the recent corporate scandals and the increase of student interest in the field of business ethics. Over the next year, professors in every concentration will look to incorporate more discussions of corporate wrongdoing into their classes. Dunfee anticipates greater emphasis on corporate governance, independence issues and conflicts of interest. Management professors will discuss the corporate structural problems which can lead to fraud. Legal Studies professors may speak of the implications of inlfating earnings reports and the consequences of government regulation of financial markets. Accounting professors -- who have traditionally had difficulty communicating the dry material of financial accounting, tax accounting, and auditing -- may now see a surge of interest when they integrate the lessons of Enron and Andersen Consulting.

Some professors, including Management Professor Michael Useem, have already incoporated guest lecturers from those companies into their fall curriculum, and most professors will be looking for ways to cite recent examples of criminal activity to help students understand complex governing structures and accounting principles.

It is important for professors to see themselves as stewards of the next generation of financial analysts, accountants, consultants, and corporate executives, and not as contributors to the financial market's current mess. Business ethics have finally been seen as extremely important, and must not be relegated to the last five minutes of every lecture or the last lecture of a semester, as it has often been found in Accounting, Marketing, Finance, and Management. Every department should work for more integration of ethical issues into their currculum so that students can see the relationships between separate corporate sectors and ethics. Wharton undergraduates should be required to take a course in the Business Ethics subsection of the Legal Studies Concentration to meet their requirements for graduation. This type of course couldn't hurt Engineering, College, or Nursing students either.

Of course, it is unlikely for one class alone to prevent a student from engaging criminal behavior -- particularly the white collar crimes of fraud or tax evasion -- but it is important for one's business education to differentiate between right and wrong behavior and to highlight the consequences of those actions. If an alumnus chooses to commit such a crime, it should not be for lack of a proper education. An environment at the Wharton School that encourages ethical practice in all forms of business will benefit students, the federal government and all the world's consumers. With the proper education, we may be able to avoid future problems like those in today's business environment.

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