Question

read about the 2001 martha stewart case then discuss the ethical theories: utilitarinsim, kantian ethics, and virtue ethics and apply them to martha stewarts behevior.

Answer 1

Discussion of ethical theories and their application to Martha Stewart’s behavior:

Utilitarianism: As per this ethical theory the actions that promotes the happiness of greatest number of people in the society is considered the greatest good. Thus as per the theory of utilitarianism an action will be considered ethical if it leads to happiness for others. If an action tends to harm others it will not be ethical.

Martha’s behavior was unethical as per the theory of utilitarianism. This is because she ensured that she was able to avoid losses from the fall of stock prices of ImClone by making use of nonpublic information from her broker. While she used nonpublic information to ensure that she did not book losses her action of using nonpublic information created information asymmetry and caused pain to other investors in ImClone’s stock.

Kantian ethics: As per Kant’s theory the rightness or wrongness of an action does not depend on their consequences but on whether the actions fulfil the duty of a human being. As a stock trader Martha had a duty to abide my rules and regulations of the market. SEC (Securities and Exchange Commission) has made insider trading illegal and as Martha benefitted from an inside tip she violated her duty of being an ethical stock trader. She violated her categorical imperative of not gaining from inside information and nonpublic information.

Virtue ethics: As per this theory the emphasis is on one’s character and virtue more than anything else rather than the need to perform one’s duty and think about the consequences. Martha did not demonstrate virtue of mind and character when she decided to be a part of the insider trading scheme in the ImClone scandal. She was guided by her greed and as such there was no sense of honesty in her actions.