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Chapter 3 Ethics and Finance

One Bad Apple…

PLEASE NOTE: This book is currently in draft form; material is not final.

The business profession has certainly had its share of scandals over the years, and finance in particular has had more than its fair share of the culprits. Given the importance of trust when dealing with matters of money, finance professionals should realise more than most the importance of integrity and reputation. But, more importantly, we should all strive for a higher ideal: to do what is right and just.

Every human that has developed the ability to reason (that is, not acting solely on instinct) has had to make ethical judgments. Debate about what is ethical is not a new topic (many important writings that are still studied today are thousands of years old). It would be impossible for us to definitively explore all of ethics in one book or one course, let alone one chapter, and yet we must, for ethical dilemmas abound for financial managers. To teach the tools of finance without any discussion about ethical use would be negligent (and unethical!).