5. Ethical issues in …

Finance

Fundamentally, finance is a social science discipline. The discipline borders on behavioral economics, sociology, economics, accounting and management. It concerns technical issues such as the mix of debt and equity, dividend policy, the evaluation of alternative investment projects, options, futures, swaps, and other derivatives,  portfolio diversification  and many others. Finance is often mistaken to be a discipline free from ethical burdens. The 2008 financial crisis caused critics to challenge the ethics of the executives in charge of U.S. and European financial institutions and financial regulatory bodies. Finance ethics is overlooked for another reason—issues in finance are often addressed as matters of law rather than ethics.

In ethical reporting of finance, financial statements play an important role.

* The internal financial reporting has to be fair and honest.

* To run a business ethically, it is necessary to have trustworthy internal auditing system.

The steps that a company's management should take into account for true, fair and reliable management accounts are:

1. Determining the key elements of the business like the objectives of the firm and see how they are defined and measured.

2. Making sure that the funds are allocated to different activities on the basis of their importance.

3. Frame rules that have a positive effect on business activities. It is important to ensure that each project or department is allotted its fair share of funds and that the projected earnings of the project or the department are in accordance with the funds allocated to it.

Fairness in trading practices, trading conditions, financial contracting, sales practices, consultancy services, tax payments, internal audit, external audit and executive compensation also fall under the umbrella of finance and accounting. Particular corporate ethical/legal abuses include: creative accounting, earnings management, misleading financial analysis insider trading, securities fraud, bribery/kickbacks and facilitation payments. Outside of corporations, bucket shops and forex scams are criminal manipulations of financial markets.

Human resource management

Human resource management occupies the sphere of activity of  recruitment selection, orientation, performance appraisal, training and development, industrial relations and health and safety issues. Corporate Ethicists differ in their orientation towards labor ethics. Some assess human resource policies according to whether they support an egalitarian workplace and the dignity of labor.

Issues including employment itself, privacy, compensation in accord with comparable worth, collective bargaining (and/or its opposite) can be seen either as inalienable rights or as negotiable. Potential employees have ethical obligations to employers, involving intellectual property protection and whistle-blowing.

Employers must consider workplace safety, which may involve modifying the workplace, or providing appropriate training or hazard disclosure.

Larger economic issues such as immigration, trade policy, globalization  and trade unionism affect workplaces and have an ethical dimension, but are often beyond the purview of individual companies.

Sales and marketing

Marketing ethics appeared only as late as 1990s. Marketing ethics was approached from ethical perspectives of virtue or virtue ethics,  deontology,  consequentialism,  pragmatism and relativism.

Ethics in marketing deals with the principles, values and/or ideals by which marketers (and marketing institutions) ought to act. Ethical marketing issues include marketing redundant or dangerous products/services transparency about environmental risks, transparency about product ingredients such as genetically modified organisms with possible health risks, financial risks, security risks, etc., respect for consumer privacy and autonomy, advertising truthfulness and fairness in pricing & distribution.

Marketing can influence individuals' perceptions of and interactions with other people, implying an ethical responsibility to avoid distorting those perceptions and interactions.

Marketing ethics involves pricing practices, including illegal actions such as price fixing and legal actions including price discrimination and price skimming. Certain promotional activities have drawn fire, including green washing, bait and switch, shilling, viral marketing, spam (electronic), pyramid schemes and multi-level marketing. Advertising has raised objections about attack ads, subliminal messages, sex in advertising and marketing in schools.

One of the most important attributes for business success is the distinguishing quality of practicing admirable corporate ethics. Corporate ethics, practiced throughout the deepest layers of a company, become the heart and soul of the company's culture and can mean the difference between success and failure.

These principles deserve to be considered as an important insight for companies striving for long-term success and growth.