ETHICS IN FINANCE

John R. Boatright
Loyola University Chicago

At the present time, the field of finance ethics is barely formed.

Although standard business ethics courses give some attention to
ethical issues in finance, few finance departments include a treatment
of ethics in their courses. Interest in finance ethics is growing,
however, and many people in finance believe that ethics should
receive some attention in finance education. In the development of any
area of applied ethics, critical questions arise about the subject matter
of the field, the appropriate theoretical approach, and the suitable
teaching materials.
As the author of the first comprehensive textbook in finance ethics
(Ethics in Finance, Blackwell Publishers, 1999), I propose a
presentation, which is based on this textbook, that answers these
questions. In particular, I will explain my conception of the field of
finance ethics and offer an outline of a course or module in finance
ethics. The main goal of this presentation is to promote the teaching of
finance ethics in standard business ethics courses and especially in the
finance curriculum by providing practical guidance and materials.
The presentation will cover:
1. The current state of finance ethics and the impediments to the
development of the field, including the diversity of finance and
the close regulation of financial activity.
2. A framework for organizing the main issues in finance ethics.
Specifically, the field can be understood under the heads of (a)
financial markets, (b) financial services, and (c) financial
management.
3. The relevant theoretical approaches to finance ethics.
Specifically, these are (a) fairness in market transactions, and (b)
agency relations and fiduciary duties.
4. A listing of the main ethical issues that arise in finance and could
comprise a course in finance. These can be organized as ethical
issues in (a) financial services (which involve a professional and a
client); (b) investment decisions (which are typically made by
institutional investors); (c) the regulation of financial markets;
and (d) corporate governance.
5. Suggestions for suitable case studies.