Ethics and Finance

This chapter will review the various ethical considerations that managers in a business face and explain the concept of fiduciary duty. It also examines unique ethical concerns that arise from globalization.

Ethics Foundations

Legal vs. Ethical

Note that "legal" and "ethical" are not necessarily the same thing. Most ethical systems include following just laws (since they arise from a social contract), but can allow for the violation of laws that are unjust (the civil disobedience of Gahndi and Rosa Parks are some canonical examples). And, in many ethical systems, the fact that something is permitted by law does not necessarily mean that it is ethical to engage in the behavior.

Additionally, many professions include self-governance or designations that require adherence to a set of ethical guidelines or a code of conduct. For example, the CFA Institute maintains a "Code of Ethics & Standards of Professional Conduct" that members with a CFA designation are obliged to uphold.