How do ethics codes apply to project selection and capital budgeting? Capital Budgeting is the process through which a company evaluates the long-term financial and economic benefit of an investments or project. Ethics plays an important role in project selection because a project that might appear beneficial to the firm otherwise may not be acceptable when viewed from an ethical standpoint. Below are the primary ways in which ethics code impact the capital budgeting decisions: Responsibility: Businesses need to take responsibility for their actions and the projects they undertake. Conflicts of Interest: Businesses should avoid accepting projects that give the impression of a conflict of interest. Honesty: The project evaluation criteria should be free of biases and misrepresentations. Ethically evaluating a project reduces the potential for project related risks as well as project termination. What are the potential risks to a company of unethical behaviors by employees? It can tarnish the Company's reputation Result in legal issues for the Company Decrease in Productivity levels and negative impact of employee performance Increased internal conflicts within the organisation due to poor corporate culture Higher employee turnover Discomfort within employees regarding reporting of unethical behaviour of others Loss of respect for superiors who