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Corporate Social Responsibility: Capitalism and Fraud

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Comment the following quote: ''Capitalism is the cause of fraud in investments and financial problems of today.''

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Solution Summary

Corporate Social Responsibility is discussed step-by-step in this solution. The response also has the sources used.

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Step 1
Capitalism is not the cause of fraud and investment and financial problems of today. Capitalism is based on private ownership of means of production. The objective of capitalism is profit. Capitalism requires capital accumulation and the existence of competitive markets. This does not mean that capitalism causes fraud in investments. Capitalism leads to high rate of economic growth, greater opportunities for entrepreneurs, and more employment opportunities. . Capitalism cannot be blamed for the financial problems of today.

Step 2
Corporate social responsibility is the cornerstone of business development and growth. This is also called corporate conscience, corporate citizenship, or social performance. Corporate social responsibility is self-regulation so that the company complies with the spirit of law, ethical standards, and international norms. Frauds in investment occur because of unethical business practices and techniques used to misrepresent earnings. Typically, the balance sheet misrepresents earnings to indicate favorable performance even though the company has not performed well. Creative accounting practices are used to commit frauds in investment. Capitalism cannot be blamed for that. There are special reasons why frauds in investment have taken place. There is reckless management, lack ...

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