ETHICAL AND UNETHICAL ISSUES IN FINANCE

What is ethics? 

• The discipline dealing with what is wrong and bad and with moral duty and obligation. 
• A system of moral principals.

What is business ethics?

• The principals and standards that determine acceptable conduct in business organisations.
• Is a form of professional ethics that examines ethical principals and moral or ethical problems that arise in a business environment.
• Business ethics focuses on what constitutes right or wrong behaviors in the world of business
•  Corporate business executives have a responsibility to their shareholders and employees to make decisions that will help their business make a profit. But in doing so, business people also have a responsibility to the public and themselves to maintain ethical principles. 

ETHICAL ISSUES IN FINANCE

• Financial statements                                                                                                                                                                                            
• Financial Markets                                                                                                                                                                                                
• Insider Trading                                                                                                                                                                     
• Hostile Takeover

                           

FINANCIAL STATEMENTS

The ethical dilemmas that accountants sometimes face includes conflicts of interest, payroll confidentiality, illegal or fraudulent activities, pressure from management to inflate earnings, and clients who request manipulation of financial statements.

Preparing and maintaining precise and reliable financial statements is the essence of fair financial reporting. Fraudulent asset valuations happen when companies utilize off-balance sheet financing or create hidden reserves to show minimal income. These are the financial statements.

FINANCIAL MARKETS 

Ethical Issues in Financial Markets is Municipal Bond Trading, Institutional Investing, Moral Leadership etc. Ethical issues sometimes occur not because people are evil or even greedy, but because the way in which their view a situation belies its ethical import. 

INSIDER TRADING

Insider trading has managed to earn itself a dreadful name in the years. People who engage in insider trading are though to be completely devoid of ethical values. However, not all individuals who engage in insider trading are unethical; studies have shown that some insider trading are useful to the investment society. Some researchers in philosophy, law and economics have not decided whether the insider trading should be illegal in all situations. The best thing is to do is to detach those who are illegally harmed by insider trading. If such people exist, then obviously worded legislation could be passed to stop any scheme from being for being faithful against these people and groups, while allowing non-fraudulent transaction to be completed without dread of action. Until it can obviously be shown that an insider training fraudulently harms an individual rights, it will also destroy the competition between the people and the company, and will most likely have a negative market response.

HOSTILE TAKEOVER

Ethical issues relating to hostile takeovers.

    The field of business is considered as one of the most important sector in society. It is the one responsible in providing the goods and services that almost all the people need to survive. The business sector also greatly contributes to the economic robustness of a country in terms of the income that it accumulates because of the local and foreign operations within this sector. Nevertheless, the nature of the business sector operates under very stiff competition.

Hostile takeover is defined as a "type of corporate takeover which is carried out against the wishes of the board of the target company" This is an unusual kind of acquisition because it does not take place nearly as much as friendly takeover, wherein to companies work together as they deem that the takeover is beneficial for both parties. Hostile takeover can be risky for the company who will takeover especially at the event that it falls to acquire the necessary and relevant information regarding the target company.