Ethics in Finance

In: Business and Management

Submitted By JJ15815
Words 481
Pages 2
Ethics in Finance

To help demonstrate why ethics in finance is need the falling of WorldCom is used. In the matter of three years WorldCom went from one of the most successful and promising companies to a bankrupted and absorbed company because of upper management lacking ethics. In early 2001 WorldCom expected and thus projected the use of internet to increase and so they made a significant amount of leases to internet and telecom service providers. However, the internet usage did not increase but crashed causing many of WorldCom’s leases to default. To help save their appearance WorldCom used reserve account to cover operating expenses, making it look as if they made money despite the many defaults. WorldCom did this knowing it would violate transfer rules and the proper use of Reserve Accounts. By the end of the 1st Quarter, 2002, WorldCom had fraudulently transferred 3,062 million dollars. Due to the amount the three internal accountants, who helped with the transfers, grew deeply upset and choose to meet with the SEC, FBI, and U.S. Attorney’s Office on June 24, 2002 to bring forth WorldCom’s fraud. The news of WorldCom’s fraud caused their stocks to plummet leading them to bankruptcy by July of 2002. WorldCom changed its name, MCI Communication, in attempts to come back from the fraud scandal. They were unable to do so and were acquired by Verizon in 2005. The WorldCom case shows how unethical behaviors escalate in a small amount of time. There are five arguments as to why people should care about ethics: sustainability, sets higher standards, develops a positive reputation and it builds: trust, teams, and leadership. By combining all five arguments and applying those in a company the public build a positive impression of that company which allows them to do well in the economy even if the markets are going doing poorly themselves. While adhering to…...

Similar Documents

Finance

...costly for firms to pollute, thereby affecting the firm's decisions regarding activities that cause pollution. Other "incentives" used by governments to align private interests with public interests include legislation to provide for worker safety and product or consumer safety, building code requirements enforced by local governments, and pollution and gasoline mileage requirements imposed on automobile manufacturers. AACSB: Ethics Blooms: Analysis Difficulty: 2 Medium Learning Objective: 01-06 Explain why value maximization is not inconsistent with ethical behavior. Topic: Understanding the Corporation Is value maximization always ethical? Modern finance does not condone attempts to pump up stock price by unethical means, but there need be no conflict between ethics and value maximization. The surest route to maximum value starts with products and services that satisfy customers. A good reputation with customers, employees, and other stakeholders is also important for the firms' long-run profitability and value. AACSB: Ethics Blooms: Application Difficulty: 2 Medium Learning Objective: 01-06 Explain why value maximization is not inconsistent with ethical behavior. Topic: Understanding the Corporation Describe agency problems in general, and offer at least three examples from corporations. Whenever the firm's managers are different than the firm's owners, the potential exists for agency problems. Management may be taking advantage of......

Words: 711 - Pages: 3

Finance

...FINANCE I initially joined Colgate for the opportunity to work for a recognized multinational, and the prospect of having a global career was very enticing. I am currently a Finance Director for Colgate-Palmolive in the Philippines. What I like most about working at Colgate is the exposure to different cultures, the focus on people development, and the strong global ethics mindset. Since joining Colgate, my professional development has taken a very deliberate course through assignments in varying functional and cross-functional situations (for example Corporate Finance, Supply Chain, Customer Development/Sales, and Subsidiary) that have proven to be great building blocks as I progress within the organization. Participation in varying degrees of leadership development programs have also been a strong complement to preparing me for greater challenges as I advance my career within Colgate. Opportunities to also work cross functionally and in different economic and cultural environments have been great contributing factors in my development. My most exciting projects to-date include my current role in the Philippines which is providing me the opportunity to manage in an environment that is vastly different from the US. I also participated in a year-long leadership development program with fellow Colgate employees from different functions, backgrounds, cultures that provided a great deal of insight into managing in a global environment and Colgate's strategic focus. The key......

Words: 3028 - Pages: 13

Finance

...How to Motivate Employees and Improve Work Ethics by Lisa Bigelow, Demand Media Don't point out mistakes that are mistakes in your eyes only. Related Articles * Can You Motivate Employees by Reducing Supervision at Work? * Decisions Employees Can Make to Help Motivate Themselves * Advantages of Training Employees About Work Ethics * How to Motivate Your Employees' Team Building * A List of Good Work Ethics by Employees * Different Types of Organizational Structure Motivating employees to work more productively and to be happier while doing it is a stiff challenge for even the most seasoned manager. Human behavior specialists indicate that the best way to avoid motivation and laziness problems is to assess potential employees carefully by way of personality testing. But what do you do when the hiring's done and you need the employees you have to perform more productively? Try proven, specific techniques designed to keep even your most cynical employees satisfied and productive. The first step? Back off. Nobody likes a micromanager. Ads by Google Options Trading Lessons With just these 3 Free reports you could be trading by day's end. wealthdaily.com​/​Options_Trading Step 1 Set specific goals, and trust your employees to reach them. According to Forbes, nothing makes enthusiasm vanish faster than a micromanager who doesn't trust her employees to do their work properly. Force yourself to let go by setting a clear and achievable goal; for......

Words: 2101 - Pages: 9

Finance

...GLOBALIZATION AND THE MULTINATIONAL FIRM SUGGESTED ANSWERS TO END-OF-CHAPTER QUESTIONS QUESTIONS 1. Why is it important to study international financial management? Answer: We are now living in a world where all the major economic functions, i.e., consumption, production, and investment, are highly globalized. It is thus essential for financial managers to fully understand vital international dimensions of financial management. This global shift is in marked contrast to a situation that existed when the authors of this book were learning finance some twenty years ago. At that time, most professors customarily (and safely, to some extent) ignored international aspects of finance. This mode of operation has become untenable since then. 2. How is international financial management different from domestic financial management? Answer: There are three major dimensions that set apart international finance from domestic finance. They are: 1. foreign exchange and political risks, 2. market imperfections, and 3. expanded opportunity set. 3. Discuss the three major trends that have prevailed in international business during the last two decades. Answer: The 1980s brought a rapid integration of international capital and financial markets. Impetus for globalized financial markets initially came from the governments of major countries that had begun to deregulate their foreign exchange and capital markets. The economic integration and......

Words: 1254 - Pages: 6

Finance

...Steven W. Simmons Sr. University of Phoenix Business Structures Fin/571 – Corporate Finance Oscar Lewis August 16, 2014 Business Startup When making important business decisions, the concepts of corporate finance tend to be the best model to use. These concepts offer proven methods, which improve the financial success. Discussed below are basic corporate financial concepts, which can be applied and yield positive results. Principles of Corporate Finance When dealing with business investments most commercial entities have used corporate financing in the company. The principle of self-interested behavior is the principle which creates a financial advantage for all parties involved when the playing field is equal or all components associated with the deal are equal. As we strive to gain a deeper comprehension of business transactions through human behavior we find that each of the 12 principles carry invaluable weight to the success or failure of the company. Comparative advantage, diversification, options, risk-return tradeoff, signaling, and valuable ideas are some of the principles used in business dealings. Financial principles, financial markets, and business ethics form a foundation for the financial decisions that managers routinely make. Accounting Net Income and Cash Flows Changing a business from one process or industry to another will completely alter the process of recording......

Words: 427 - Pages: 2

Ethics in Finance

...ETHICS IN FINANCE CONTENTS INTRODUCTION ..................................................................... 4 ETHICS IN FINANCE ............................................................. 5 ROLE OF ETHICS IN FINANCE............................................ 5 TRUST .......................................................................................... 6 Aristotelian virtuous ethics......................................................... 7 CODE OF ETHICS ................................................................... 7 ETHICAL BEHAVIOR .............................................................. 8 CODE OF ETHICS IN FINANCE AND ETHICAL BEHAVIOR................................................................................... 8 ETHICS IN FINANCE IN DIFFERENT FIELDS ................... 8 NEED OF ETHICS IN FINANCIAL MARKET, SERVICE INDUSTRY AND PEOPLE IN ORGANIZATON: ......................................................................................................... 9 SOCIALLY RESPONSIBLE INVESTMENT ....................................................................................................... 10 ETHICS V/S FINANCE .............................................................. 10 IS FINACE ETHICALLY NEUTRAL ...................................... 11 CORPORATE SOCIAL RESPONSIBILITY ............................11 CONCLUSION..........................................................

Words: 3473 - Pages: 14

Finance

...and integrity chapter. These are adherence to high standards of professional ethics; efficient, effective, and economic use of resources; responsive, prompt, effective, impartial, and equitable provision of services; participation of the people; transparency and timely provision of accurate information; a balance struck between appointments on the basis of fair competition and merit; representation of Kenya’s diversity; and equality of opportunity for men and women, all ethnic groups, and persons with disabilities. The Public Service Commission is entrusted with the responsibility of promoting the national values and principles of good governance and the principles of public service, and is required to report to the President and Parliament the extent to which the public service is complying with these values. An independent ethics and anti-corruption commission is charged with the responsibility of ensuring compliance and enforcement of the chapter on leadership and integrityin the new constitution Unfortunately, the lack of prosecutorial powers, which has been a stumbling block to the efficient discharge of functions for previous commissions, is not resolved in the Constitution. The Constitution, however, insulates the office of the Director of Public Prosecutions (DPP) from political interference, making it a much more independent office than existed under the Attorney General’s office. The Ethics and Anti-Corruption Commission established pursuant to the Constitution......

Words: 3064 - Pages: 13

Finance

... The managerial accountant collects reports and record financial information from a number of an organization’s units, analyzes, and observes the units’ budgets and suggests allocation and funding to them. The two main roles of a managerial accountant in are to facilitate and provide information relevant to the decision-making process (F., 2012). In bookkeeping the managerial accountant ensure that the financial information of an organization is fair and control practices internally comply with company’s procedures and policies. In facilitating decision-making, the managerial accountants provide management with information needed for self-control (Hopper, 1980). They perform major tasks such as score-keeping and maintaining records of finance for use internally and externally (M. Newman, 1989). Score-keeping together with attention-directing that have to do with compliance reporting issues and control-type issues respectively. According to Kaplan (1995), managerial accountants formulate and implement corporate strategy and design organization’s management data system (Cooper, 1996a, 1996b). Ethical Issues for the Management Accountant Any managerial accountant working for a private or public sector should be loyal and impartial to the ethical standards of a company while reviewing its financial reports. Ethical issues always arise, but the accountant should remain vigilant continually so as to reduce chances manipulation of financial reports by external forces that might......

Words: 2450 - Pages: 10

Ethics in Finance

...Ethics In Finance Ethical issue and the concept of immorality is not only ubiquitous within organizations, it’s part of our everyday lives. Due to the environment we live in, some feel it’s not their duty to apply ethical behavior due to them emulating and stooping to the standards set by society or the communities they live in. The ideology ‘when in Rome, behave like a Roman,’ assumes that everybody acts ethically relative to his local environment, making it more challenging to not only reveal what is ethical or unethical behavior, but it creates moral relativism, which adversely inhibits one’s identity. The ide of complying ethical behavior can be very intricate, with people thinking their too many rules out there, and the way we live our lives learning new things everyday becomes hard to master all what we’ve learnt. People go about being ethical as if it has been exerted on them by force, thinking they’ll be rewarded in the mere future, most likely financial success. Conversely, some individuals will be ethical through trying to establish a legacy on behalf of their family name, and try to solidify a robust reputation for themselves in the public eye. Besides being a student who has to engage with vast array of people, due to how my personality is of being outgoing, very social, I have a substantial amount of humanity within me allowing me not to only care for those who I regard as close friends or I associate with, the idea of having that guilty conscience of......

Words: 507 - Pages: 3

Finance Ethics Paper

...Buy it on Credit and be True to Your School – Ethics Paper Akhil Rangaraju MG 670 Fundamentals of Corporate Finance King Graduate School Question1: Should Universities enter into agreements to offer affinity credit cards to students? Answer: List down the facts of the case. Banks offer credit cards to students in the hope that if they can’t pay their bills, their parents will. Over a period of time banks also expect them to turn into loyal customer. Ideal Customer: Students are also ideal customer as they tend to carry more balances on their card than other bank customers. This has led to increase in burden of student debt which may impair their future credit capacity. This is more so because banks employed questionable marketing and sales tactics to issue credit cards to students. Growing Student Debt: It is also noted that student debt has been growing over a period of time. Not only the number of students having credit card has been going up, the average balance has also been going up over the years. Growing student debt causes serious problem for them in futures. Reasonable Reason for Credit Card: On the other hand, students seem to be getting credit cards to create a credit history and for emergency protection. They also get credit card for convenience and do not max out their credit limits. All these seem to be valid reason for them to have a credit card. Affinity Card: Recently, credit card companies have started issuing affinity card. Affinity card gives...

Words: 1868 - Pages: 8

Finance

...requires you Case to integrate the various areas of finance into a Procedures decision framework. As such it is expected that you will be a very active partner in the educaCalendar tional process. Lectures as a vehicle will be minimal. Instead student presentations, student Presentation Days discussion sessions, and group work will make up the majority of your experience. Writing Reports The course also requires you to grapple with the difficulty of decision making under conditions of uncertainty. It is expected that you How Am I Graded ? will be faced with ambiguous situations which will require you to make numerous judgements. Enrichment Assignments These situations will require a combination of financial theory and practice. It is unlikely that these assignments will result in clear and unambiguous solutions. You will be required to draw on your previous experiences from a variety of areas in order to successfully complete the class requirements. A particularly important goal in this class is to obtain an understanding and appreciation of the valuation process in markets, under conditions of risk or uncertainty. The essence of finance, in the final sense, is an understanding of how various decisions influence firm value. Course Prerequisite For most of you this class represents the The specific prerequisite for this class is terminal experience in corporate finance (If the Finance 325. Since the prerequisite for Finance 325 is Finance 323 all of you phrase terminal......

Words: 3841 - Pages: 16

Finance

...trade transaction • Ddiscuss the various payment methods for international trade • Ddiscuss the characteristics of export finance and risk insurance • Ddiscuss the objectives and major tasks of current asset management • Eexplain the features of international cash management, accounts receivable management and inventory management • Ddiscuss the important differences between domestic taxation and multinational taxation. Learning resources Textbook Eiteman, Stonehill & Moffett 2013, edition 13th01, chapters 175, 17 19 and 20 and 18. Introduction This final module of the course encompasses a number of areas that are essential to any multinational finance course but have yet to be covered in this course. In particular, the module focuses on specific areas regarding the management of multinational operations. The module is essentially broken into three sections, all of which have a relevance to each other and to the other topics covered in this course. The first section focuses on the importance of foreign trade, in particular with regards to the growth potential it offers firms. More importantly, this section centres on the objectives of foreign trade, the key documentation necessary in any efficient foreign trade transaction and the objectives of such documentation and the various payment methods for foreign trade transactions, including trade finance techniques. The second section analyses working capital management, predominantly within the global setting of a......

Words: 10547 - Pages: 43

Finance

...Corporate Finance Fundamentals [FN1] Examination Blueprint 2010–2011 Purpose The Corporate Finance Fundamentals [FN1] examination has been constructed using an examination blueprint. The blueprint, also referred to as the test specifications, outlines the content areas covered on the examination and the weighting allotted to each content area. This document also lists the topics, the level of competence for each topic, and the related learning objectives. The learning objectives have been designed to ensure that the competencies are met. In addition, information is provided on the proportion of each question type presented in the examination (that is, multiple choice, quantitative problems, and so on). Use Students should use the examination blueprint to prepare for the course examination. The blueprint may not include all the topics listed in the course outline; however, students are still responsible for acquiring a broad-based knowledge of all topics not listed in the blueprint since these topics will be tested in assignment and review questions. The topics not listed in the blueprint will also provide students with a greater depth of understanding of finance concepts. Examination Objectives The objectives of this 3-hour, comprehensive examination are to test CGA students on the prerequisite knowledge required for the completion of Accounting Business Case [BC1] and advancement into Financial Accounting Consolidations and Advanced Issues [FA4], Accounting Theory and......

Words: 2503 - Pages: 11

Memo Addressing Core Issues on Topic of Ethics in Finance

...Memo addressing core issues on topic of Ethics in Finance Winter 2011 Hsiu Chang Ethic is useful because it makes business stable and predicable. In a game, a cheater who is not caught will continue to reap huge rewards. However, if the trend continue, it will encourage other players to cheat or leave the game because they are being driven out of business. If a business operator always has to wonder if the other side is playing by the same rule, if a customer constantly wonder if the vendor is overcharging for the invoice, then business slow down, becomes inefficient. However, many cheaters are not caught or punished. "Business Ethics" is the third episode of the fifth season of the television series The Office. One of the female purchasing officer has been sleeping with a vendor in order to get discount for the entire purchasing department, and Outback Steakhouse coupons. When this is discovered, the head of the company turned a blind eye because it is good for the balance sheet (Wikipedia, 2011). Having good ethic provides a clear conscience, and if there was an ethical problem, shared the advantage gained by cheating with the entire team will once again clear the conscience. Ethic in finance is important because it will provide a clear picture of the company. The leader of the company cannot see where the company can go if they do not know where the company is. However, accountant in a non-public company works for the leader and this agents’ fiduciary......

Words: 1432 - Pages: 6

Ethics

...Role of Ethics and Compliance As learned from the company’s website, Microsoft was founded in 1975 and has the NASDAQ symbol "MSFT". This company is the worldwide leader in software, services, and solutions. Because having a strong presence and leadership in the software engineering industry, Microsoft has a need for the role of ethics and compliance in the organization’s financial environment. The consequences can be permanent if not for the success history of the finance ethics and compliance team. The primary focus of Microsoft finance team’s mission includes providing world class financial leadership to optimize long term shareholder value as well as be recognized in the industry as setting the utmost highest degree of leadership in using innovative processes, tools, and systems. Microsoft Finance team members uphold values in each role of the company in order for each job be in compliance with the ethical policies and guidelines that includes finance service, integrity, results, and assisting other individuals be successful through their efforts. Ethical and compliance practices are maintained through Microsoft’s Overview that includes the Finance Code of Professional Conduct, Shareholder Accountability, Corporate Policies and Guidelines, and Board of Directors. Microsoft’s Chief Executive Officer (CEO), Chief Financial Officer (CFO), Corporate Controller, and the employees of the finance organization uphold important and prominent roles in corporate governance that......

Words: 518 - Pages: 3