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Running head: Ethic paper: Financial Market

Ethic paper: Financial Market
Ayoub Bokhabrine
King Graduate School
Dr. Gracer Yung

a senior level executive may charge a family dinner to the company as a business expense. Usually. For example. Otherwise known as stealing or embezzlement. During the 1990s and 2000s. misappropriation of assets can occur at nearly any level of the company and to nearly any degree.Ethic paper: Financial Market 2 Ethics in accounting are concerned with how to make good and moral choices in regard to the preparation. At the same time. the most common ethical issue in accounting is the misappropriation of assets. misappropriation of assets has occurred. a series of financial reporting scandals brought this issue into the forefront. Fraudulent Financial Reporting Most accounting scandals over the last two decades have centered on fraudulent financial reporting. there are almost always ill effects in the long run. Fraudulent financial reporting is the misstatement of the financial statements by company management. While the effects of misleading financial reporting may boost the company's stock price in the short-term. a line-level production employee may take home office supplies for personal use. this is carried out with the intent of misleading investors and maintaining the company's share price. presentation and disclosure of financial information. Knowing some of the issues presented in accounting ethics can help you ensure that you are considering some of the implications for the actions that you take with your own business. In both cases. Misappropriation of assets is the use of company assets for any other purpose than company interests. This short-term focus on company finances is sometimes known as "myopic management. ." Misappropriation of Assets On an individual employee level.

Certainly there are conflicting rights at stake. This creates the dilemma of whose rights are more important and whether favoring certain rights can lead to consequences such as unethical action toward the disadvantaged party.Ethic paper: Financial Market 3 Insider Trader Insider trading in financial markets presents various ethical issues. insider trading is considered unfair because all market participants do not have an equal opportunity to exploit the information used to execute insider trades. some argue that insider trading makes markets more efficient and ensures stock prices are represented more accurately. further interrupting the flow of financial markets. and investors being safeguarded against their own naivety. The financial effects of insider trading can amount to hundreds of millions of dollars in high profile incidents. all traders having equal information. These trades take advantage of favorable information to reap personal monetary gain through large sales or seek to avoid heavy losses from unfavorable information. Is allowing insider trading always unethical. or can it be considered ethical under certain circumstances? The increasingly global economy creates a vast stage on which insider trading can affect a wider range of stakeholders than ever before. and inequalities across market participants. so it is not hard to sympathize with those who are unable to benefit from insider tips. Insider trading makes those who are not privy to such information feel powerless and no longer wish to participate. . such as insiders freely partaking in trading securities. Such circumstances highlight why insider trading is illegal and generally considered a violation of justice. including conflicting rights. differing cultural norms. Typically. a common ground of acceptable behavior needs to be defined in order for everyone to feel safe investing in the market. Given this fact. even though there are competing philosophies that would suggest otherwise. However.

it is important for management to protect the company's proprietary information. it may not be ethical to keep this information from the investors.Ethic paper: Financial Market 4 Disclosure As a subtopic of fraudulent financial reporting. disclosure violations are errors of ethical omission. . the higher stakes provided by the Sarbanes-Oxley Act have definitely upped the ante. destroying information. interfering with an investigation and provides legal protection for whistle-blowers. Penalties Penalties for violations of accounting ethics laws have increased greatly since the passage of the Sarbanes-Oxley Act of 2002. This legislation allows for harsh penalties for manipulating financial records. If accounting ethics wasn't an important consideration before. the failure to disclose information to investors that could change their decisions about investing in the company could be considered fraudulent financial reporting. chief executives can be held criminally liable for the misreporting of their company. In addition. While intentionally recording transactions in a manner that is not in accordance with generally accepted accounting principles is considered fraudulent financial reporting. However. if this information relates to a significant event. Company executives must walk a fine line. as well.

competence in ethics has become an essential component of being a professional accountant. Ethics has become a key area of concern in accounting at present owing to the series of corporate scandals that had taken place in the world questioning the credibility of the accounting profession. for which accounting profession is responsible for. These scandals have placed in doubt the effectiveness of contemporary accounting. Thus.Ethic paper: Financial Market 5 Conclusion This paper deals with the concept of ethics and its implications on role of accounting professionals. Hence. . auditing and corporate governance practices. recognition of the accounting profession is closely linked with the maintenance of highest ethical standards.

Robert W.. Business Source Premier. Jason Zweig. “The Intelligent Investor: Insider Trading: Why Ourselves. Stuart Rachels and James Rachels. MA: John Wiley & Sons. Kolb.” Journal of Alternative Investments. Apr 2. 2010): 152. The Elements of Moral Philosophy. B1.” The Wall Street Journal (Eastern Edition). 2010): 111-114. Boatright ed. Finance Ethics: Critical Issues in Theory and Practice. We Can’t Help .Ethic paper: Financial Market 6 References John R. “Risk Management and Risk Transfer: Distributive Justice in Finance. (2011): 90. 2011. (New York. The University of Kansas Libraries. (Danvers. NY: McGraw Hill Higher Education.