ETHICS IN THE FINANCE AND INVESTMENT INDUSTRY

Ethics can be defined as the study of what institutes of right or wrong behavior in terms of one’s principle and integrity expected to be by society. It is the branch of philosophy that focuses on morality and the way in which moral principles are derived or the way in which a given set of moral principles applies to one’s conduct in daily life. Different people face different ethical questions in their day to day life and as well as in their business life. Ethics usually assumes people are rational and make free choices correctly. We can also give or take that it has got certain rules to follow in our collaborations and our actions that affect others. There can be ethical questions that have influence in our daily life or in business life like fairness, justness, rightness or wrongness.

Both ethics in finance and investing are part of business and business ethics focuses on what constitutes right or wrong behavior in the business world and on how moral and ethical principles are applied by business persons to situations that arise in their daily activities in the workplace and their handling of client asset. Ethics that are faced in personal life is much more different and complex in business life.

Social Influences on Ethics

When evaluating professional decisions and behavior in the finance and investment industry, high standards of ethics and blatant violations of ethical conventions are difficult to explain solely in terms of individual traits and personality. Situational factors may lead to considerable differences in the ethical standards of behavior of a single individual in different social situations-a fact that has been revealed time and again by media reports. Thus, a true understanding of the psychology of ethics in the world of finance and investment requires awareness of how people interact and influence each other ethically. 1

1. See: Thomas Oberlechner Webster University Vienna “The Psychology of Ethics in the Finance and Investment Industry” Research Foundation of CFA Institute from http://www.cfapubs.org/doi/pdf/10.2470/rf.v2007.n2.4697