Skip to main content
SpringerLink
Log in

Teaching Finance Ethics

  • Published:
Teaching Business Ethics

Abstract

This article seeks to promote the study of ethics in the finance curriculum by providing an organizing framework of ethical issues in finance, a discussion of theoretical approaches to these issues, a listing of the main ethical problems in finance, and suggestions about resources and materials.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

REFERENCES

  • Almeder, R. F. and M. Snoeyenbos: 1987, 'Churning: Ethical and Legal Issues', Business and Professional Ethics Journal 6, 22-31.

    Google Scholar 

  • Anand, P. and C. J. Cowton: 1993, 'The Ethical Investor: Exploring Dimensions of Investment Behavior', Journal of Economic Psychology 14, 377-385.

    Google Scholar 

  • Ang, J. S. (ed.): 1993, 'Forum on Financial Ethics', Financial Management 22, 32-59.

    Google Scholar 

  • Anthony, R. N.: 1960, 'The Trouble with Profit Maximization', Harvard Business Review 38, 126-134.

    Google Scholar 

  • Barkey, M.: 1986, 'The Financial Articulation of a Fiduciary Duty to Bondholders with Fiduciary Duties to Stockholders of the Corporation', Creighton Law Review 20, 47-74.

    Google Scholar 

  • Bear, L. A. and R. Maldonado-Bear: 1994, Free Markets, Finance, Ethics, and Law, Prentice Hall, Englewood Cliffs, NJ.

    Google Scholar 

  • Berle, A. A.: 1932, 'For Whom Corporate Managers Are Trustees: A Note', Harvard Law Review 45, 1365-1372.

    Google Scholar 

  • Berle, A. A. and G. C. Means: 1932, The Modern Corporation and Private Property, Macmillan, New York.

    Google Scholar 

  • Bettis, R. A.: 1983, 'Modern Financial Theory, Corporate Strategy, and Public Policy: Three Conundrums', Academy of Management Review 8, 406-415.

    Google Scholar 

  • Bihde, A.: 1994, 'Deficient Governance', Harvard Business Review (November–December), 129-139.

  • Black, B.: 1992, 'Agents Watching Agents: The Promise of Institutional Investor Voice', UCLA Law Review 39, 811-893.

    Google Scholar 

  • Blair, M. M.: 1991, 'Who's in Charge Here? How Changes in Corporate Finance Are Changing Corporate Governance', Brookings Review 9, 8-13.

    Google Scholar 

  • Blair, M. M.: 1995, Ownership and Control: Rethinking Corporate Governance for the Twenty-First Century, The Brookings Institution, Washington, D.C.

    Google Scholar 

  • Boatright, J. R.: 1989, 'Tender Offers: An Ethical Perspective', in W. M. Hoffman et al. (eds.), The Ethics of Organizational Transformation: Mergers, Takeovers, and Corporate Restructuring, Quorum Books, Westport, CT.

    Google Scholar 

  • Boatright, J. R.: 1992, 'Conflict of Interest: An Agency Analysis', in N. E. Bowie and R. E. Freeman (eds.), Ethics and Agency Theory: An Introduction, Oxford University Press, New York.

    Google Scholar 

  • Boatright, J. R.: 1996, 'Business Ethics and the Theory of the Firm', American Business Law Journal 34, 217-238.

    Google Scholar 

  • Boatright, J. R.: In Press, 'Finance Ethics', in R. E. Frederick and E. S. Petry, Jr. (eds.), A Companion to Business Ethics, Basil Blackwell Publishers, Oxford.

  • Bowie, N. E. and R. E. Freeman (eds.): 1992, Ethics and Agency Theory: An Introduction, Oxford University Press, New York.

    Google Scholar 

  • Bradley, M. and M. Rosenzweig: 1992, 'The Untenable Case for Chapter 11', Yale Law Journal 101, 1043-1095.

    Google Scholar 

  • Bratton, W. W.: 1989a, 'The “Nexus of Contracts” Corporation: A Critical Appraisal', Cornell Law Review 74, 407-465.

    Google Scholar 

  • Bratton, W. W.: 1989b, 'The New Economic Theory of the Firm: Critical Perspective from History', Stanford Law Review 41, 1471-1527.

    Google Scholar 

  • Bruner, R. F. and L. S. Paine: 1988, 'Management Buyouts and Managerial Ethics', California Management Review 30, 89-106.

    Google Scholar 

  • Butler, H. N: 1989, 'The Contractual Theory of the Corporation', George Mason Law Review 11, 99-123.

    Google Scholar 

  • Caccese, M. S.: 1997, 'Ethics and the Financial Analyst', Financial Analysts Journal (January–February), 9-14.

  • Coase, R. H.: 1937, 'The Nature of the Firm', Economica, N.S. 4, 386-405.

    Google Scholar 

  • Coffee, J. C., Jr.: 1984, 'Regulating the Market for Corporate Control: A Critical Assessment of the Tender Offer's Role in Corporate Governance', Columbia Law Review 84, 1145-1296.

    Google Scholar 

  • Coffee, J. C., Jr.: 1986, 'Shareholders versus Managers: The Strain in the Corporate Web', Michigan Law Review 85, 1-109.

    Google Scholar 

  • Coffee, J. C., Jr.: 1991, 'Unstable Coalitions: Corporate Governance as a Multiplayer Game', in A. W. Sametz (ed.), The Battle for Corporate Control, Business One Irwin, Homewood, IL.

    Google Scholar 

  • Cooper, D. and G. Petry: 1994, 'Corporate Performance and Adherence to Shareholder Wealth-maximizing Principles', Financial Management 23, 71-78.

    Google Scholar 

  • Cornell, B. and A. C. Shapiro: 1987, 'Corporate Stakeholders and Corporate Finance', Financial Management 16, 5-14.

    Google Scholar 

  • Council on Economic Priorities, M. Alperson, A. T. Marlin, J. Schorsch and R. Will: 1991, The Better World Investment Guide, Prentice Hall, New York.

    Google Scholar 

  • Dees, J. G.: 1990, 'The Ethics of Greenmail', in W. C. Frederick and L. E. Preston (eds.), Business Ethics: Research and Empirical Studies, JA Press, Greenwich, CT.

    Google Scholar 

  • Dillon, K. J.: 1992, Strategic Bankruptcy: How Corporations and Creditors Use Chapter 11 to Their Advantage, University of California Press, Berkeley and Los Angeles.

    Google Scholar 

  • Dennis, R. J.: 1985, 'Two-Tiered Tender Offers and Greenmail: Is New Legislation Needed?', Georgia Law Review 19, 281-341.

    Google Scholar 

  • Dobson, J.: 1991, 'Reconciling Financial Economics and Business Ethics', Business and Professional Ethics Journal 10, 23-42.

    Google Scholar 

  • Dobson, J.: 1993, 'The Role of Ethics in Finance', Financial Analysts Journal (November–December), 57-61.

  • Dobson, J.: 1997, Finance Ethics: The Rationality of Virtue, Rowman & Littlefield, Lanham, MD.

    Google Scholar 

  • Dodd, E. M.: 1932, 'For Whom Are Corporate Mangers Trustees?', Harvard Law Review 45, 1145-1163.

    Google Scholar 

  • Donaldson, G.: 1963, 'Financial Goals: Management vs. Stockholders', Harvard Business Review (May–June), 116-129.

  • Donaldson, T. and L. E. Preston: 1995, 'A Stakeholder Theory of the Corporation: Concepts, Evidence, and Implications', Academy of Management Review 20, 65-91.

    Google Scholar 

  • Dufrene, U. and A. Wong: 1996, 'Stakeholders Versus Stockholder and Financial Ethics: Ethics to Whom?', Managerial Finance 22, 1-10.

    Google Scholar 

  • Duska, R.: 1996, 'Should Mutual Fund Managers Be Banned From Personal Trading', in W. M. Hoffman et al. (eds.), The Ethics of Accounting and Finance, Quorum Books, Westport, CT.

    Google Scholar 

  • Easterbrook, F. H. and D. R. Fischel: 1991, The Economic Structure of Corporate Law, Harvard University Press, Cambridge.

    Google Scholar 

  • Eichenwald, K.: 1995, Serpent on the Rock, HarperCollins, New York.

    Google Scholar 

  • Eisenhardt, K. M.: 1989, 'Agency Theory: An Assessment and Review', Academy of Management Review 14, 57-74.

    Google Scholar 

  • Fama, E. F.: 1980, 'Agency Problems and the Theory of the Firm', Journal of Political Economy 88, 288-307.

    Google Scholar 

  • Fama, E. F. and M. C. Jensen: 1983, 'Separation of Ownership and Control', Journal of Law and Economics 26, 301-325.

    Google Scholar 

  • Findlay, M. C. and G. A. Whimore: 1974, 'Beyond Shareholder Wealth Maximization', Financial Management 3, 25-35.

    Google Scholar 

  • Findlay, M. C. and E. E. Williams: 1980, 'A Positivist Evaluation of the New Finance', Financial Management 9, 7-17.

    Google Scholar 

  • Frederick, R. E. and W. M. Hoffman: 1990, 'The Individual Investor in Securities Markets: An Ethical Analysis', Journal of Business Ethics 9, 579-589.

    Google Scholar 

  • Freeman, R. E.: 1984, Strategic Management: A Stakeholder Approach, Pitman, Boston.

    Google Scholar 

  • Freeman, R. E. and W. M. Evan: 1990, 'Corporate Governance: A Stakeholder Interpretation', Journal of Behavioral Economics 19, 337-359.

    Google Scholar 

  • Freeman, R. E. and D. L. Reed: 1983, 'Stockholders and Stakeholders: A New Perspective on Corporate Governance', California Management Review 25, 88-106.

    Google Scholar 

  • Gorlin, R.: 1994, Codes of Professional Responsibility, 3rd ed., Bureau of National Affairs, Washington, D.C.

    Google Scholar 

  • Green, R. M.: 1993, 'Shareholders as Stakeholders: Changing Metaphors of Corporate Governance', Washington and Lee Law Review 50, 1409-1421.

    Google Scholar 

  • Grossman, S. J. and J. E. Stiglitz: 1977, 'On Value Maximization and Alternative Objectives of the Firm', Journal of Finance 32, 389-402.

    Google Scholar 

  • Hamilton, S., J. Jo and M. Statman: 1993, 'Doing Well While Doing Good', Financial Analysts Journal (November–December), 62-66.

  • Hanson, D. M.: 1993, 'Much, Much More than Investors', Financial Executive (March–April), 48-51.

  • Hawley, D.: 1991, 'Business Ethics and Social Responsibility in Finance Instruction: An Abdication of Responsibility', Journal of Business Ethics 10, 711-721.

    Google Scholar 

  • Hawley, J. P.: 1995, 'Political Voice, Fiduciary Activism, and the Institutional Ownership of U.S. Corporations: The Role of Public and Noncorporate Pension Funds', Sociological Perspectives 38, 415-435.

    Google Scholar 

  • Heacock, M. V., K. P. Hill and S. C. Anderson: 1987, 'Churning: An Ethical Issue in Finance', Business and Professional Ethics Journal 6, 3-17.

    Google Scholar 

  • Hoffman, W. M. et al. (eds.): 1989, The Ethics of Organizational Transformation: Mergers, Takeovers, and Corporate Restructuring, Quorum Books, Westport, CT.

    Google Scholar 

  • Hoffman, W. M. et al. (eds.): 1996, The Ethics of Accounting and Finance: Trust, Responsibility, and Control, Quorum Books, Westport, CT.

    Google Scholar 

  • Horrigan, J. O.: 1987, 'The Ethics of the New Finance', Journal of Business Ethics 6, 97-110.

    Google Scholar 

  • Irvine, W. B.: 1987, 'The Ethics of Investing', Journal of Business Ethics 6, 233-242.

    Google Scholar 

  • Jackson, T. H.: 1982, 'Bankruptcy, Non-Bankruptcy Entitlements, and the Creditors' Bargain', Yale Law Journal 91, 857-907.

    Google Scholar 

  • Jackson, T. H.: 1986, The Logic and Limits of Bankruptcy Law, Harvard University Press, Cambridge.

    Google Scholar 

  • Jensen, M. C.: 1984, 'Takeovers: Folklore and Science', Harvard Business Review (November–December), 109-121.

  • Jensen, M. C. and H. W. Meckling: 1976, 'Theory of the Firm: Managerial Behavior, Agency Costs, and Ownership Structure', Journal of Financial Economics 5, 305-360.

    Google Scholar 

  • Jensen, M. C. and R. S. Ruback: 1983, 'The Market for Corporate Control: The Scientific Evidence', Journal of Financial Economics 11, 5-50.

    Google Scholar 

  • Kahneman, D., J. L. Knetsch and R. Thaler: 1986, 'Fairness as a Constraint on Profit Seeking: Entitlements in the Market', American Economic Review 76, 728-741.

    Google Scholar 

  • Kane, E. J.: 1997, 'Ethical Foundations of Financial Regulation', Journal of Financial Services Research 12, 51-74.

    Google Scholar 

  • Kinder, P. D., S. D. Lydenberg and A. L. Domini: 1992, The Social Investment Almanac: A Comprehensive Guide to Socially Responsible Investing, Henry Holt & Co., New York.

    Google Scholar 

  • Kronman, A.: 1980, 'Contract Law and Distributive Justice', Yale Law Journal 89, 472-479.

    Google Scholar 

  • Langbein, J. H. and R. A. Posner: 1980, 'Social Investing and the Law of Trusts', Michigan Law Review 79, 72-112.

    Google Scholar 

  • Lewis, M.: 1989, Liar's Poker: Rising through the Wreckage on Wall Street, W. W. Norton, New York.

    Google Scholar 

  • Macaulay, S.: 1963, 'Non-contractual Relations in Business: A Preliminary Study', American Sociological Review 28, 55-67.

    Google Scholar 

  • Macey, J. R.: 1991, 'An Economic Analysis of the Various Rationales for Making Shareholders the Exclusive Beneficiaries of Corporate Fiduciary Duties', Stetson Law Review 21, 23-44.

    Google Scholar 

  • Malkiel, B. and R. E. Quandt: 1971, 'Moral Issues in Investment Policy', Harvard Business Review (March–April), 37-47.

  • Mallin, C., B. Saadouni and R. J. Briston: 1995, 'The Financial Performance of Ethical Investment Funds', Journal of Business Finance & Accounting 22, 483-496.

    Google Scholar 

  • Manne, H.: 1966, Insider Trading and the Stock Market, Free Press, New York.

    Google Scholar 

  • Markowitz, H. M.: 1992, 'Markets and Morality: Or Arbitrageurs Get No Respect', Journal of Portfolio Management (Winter), 84-93.

  • McDaniel, M. W.: 1991, 'Stockholders and Stakeholders', Stetson Law Review 21, 121-162.

    Google Scholar 

  • McGee, R. W.: 1989, 'Ethical Issues in Acquisitions and Mergers', Mid-Atlantic Journal of Business 25, 19-39.

    Google Scholar 

  • Moe, T. M.: 1984, 'The New Economics of Organization', American Journal of Political Science 28, 739-777.

    Google Scholar 

  • Moore, J. M.: 1990, 'What Is Really Unethical about Insider Trading?', Journal of Business Ethics 9, 171-182.

    Google Scholar 

  • Morley, A. C.: 1987, 'Ethical Standards for Investment Professionals', Business Economics (October), 27-34.

  • Noe, T. H. and M. J. Robello: 1994, 'The Dynamics of Business Ethics and Economic Activity', American Economic Review 84, 531-547.

    Google Scholar 

  • Noreen, E.: 1988, 'The Economics of Ethics: A New Perspective on Agency Theory', Accounting, Organizations and Society 13, 359-369.

    Google Scholar 

  • Okun, A.: 1975, Equality and Efficiency: The Big Tradeoff, The Brookings Institution, Washington, D.C.

    Google Scholar 

  • Orts, E. W.: 1992, 'Beyond Shareholders: Interpreting Corporate Constituency Statutes', George Washington Law Review 61, 14-135.

    Google Scholar 

  • Personal Investment Activities of Investment Company Personnel: 1994, Report of the Division of Investment Management, United States Securities and Exchange Commission, September 1994.

  • Pound, J.: 1992, 'Beyond Takeovers: Politics Comes to Corporate Control', Harvard Business Review (March–April), 83-93.

  • Pratt, J. W. and R. J. Zeckhauser (eds.): 1985, Principals and Agents: The Structure of Business, Harvard Business School Press, Boston.

    Google Scholar 

  • Prindl, A. R. and B. Prodhan (eds.): 1994, The ACT Guide to Ethical Conflicts in Finance, Basil Blackwell, Oxford.

    Google Scholar 

  • Quinn, D. P. and T. M. Jones: 1995, 'An Agent Morality View of Business Ethics', Academy of Management Review 20, 22-42.

    Google Scholar 

  • Report of the Presidential Task Force on Market Mechanisms: 1988, Government Printing Office, Washington, D.C.

  • Richman, J. D.: 1984, 'Merger Decision Making: An Ethical Analysis and Recommendation', California Management Review 27, 177-184.

    Google Scholar 

  • Roe, M. J.: 1991, 'A Political Theory of American Corporate Finance', Columbia Law Review 91, 10-67.

    Google Scholar 

  • Romano, R.: 1993, 'Public Pension Fund Activism in Corporate Governance Reconsidered', Columbia Law Review 93, 795-853.

    Google Scholar 

  • Scherer, F. M.: 1986, 'Takeovers: Present and Future Dangers', The Brookings Review (Winter–Spring), 15-20.

  • Scott, A. W.: 1949, 'The Fiduciary Principle', California Law Review 37, 539-555.

    Google Scholar 

  • Sealy, L. S.: 1962, 'Fiduciary Relationships', Cambridge Law Journal, 69-81.

  • Securities Arbitration Reform: 1996, Report of the Arbitration Policy Task Force to the Board of Governors, National Association of Securities Dealers, Inc., January 1996.

  • Shefrin, H. and M. Statman: 1993, 'Ethics, Fairness and Efficiency in Financial Markets', Financial Analysts Journal (November–December), 21-29.

  • Squires, G. D. (ed.): 1992, From Redlining to Reinvestment: Community Responses to Urban Reinvestment, Temple University Press, Philadelphia.

    Google Scholar 

  • Stewart, J. B.: 1991, Den of Thieves, Simon & Schuster, New York.

    Google Scholar 

  • Treynor, J. L.: 1981, 'The Financial Objective in the Widely Held Corporation', Financial Analysts Journal (March–April), 68-71.

  • Twentieth Century Fund: 1980, Abuse on Wall Street: Conflicts of Interest in the Securities Markets, Quorum Books, Westport, CT.

    Google Scholar 

  • Wall, L. D.: 1995, 'Some Lessons from Basic Finance for Effective Socially Responsible Investing', Economic Review 8, 1-12.

    Google Scholar 

  • Warren, E.: 1992, 'The Untenable Case for Repeal of Chapter 11', Yale Law Journal 102, 437-479.

    Google Scholar 

  • Williams, O. F., F. K. Reilly and J. W. Houck (eds.): 1989, Ethics and the Investment Industry, University of Notre Dame Press, Notre Dame.

    Google Scholar 

  • Williamson, O. E.: 1964, The Economics of Discretionary Behavior: Managerial Objectives in a Theory of the Firm, Prentice Hall, Englewood Cliffs, NJ.

    Google Scholar 

  • Williamson, O. E.: 1975, Markets and Hierarchies. Analysis and Antitrust Implications, Free Press, New York.

    Google Scholar 

  • Williamson, O. E.: 1985, The Economic Institutions of Capitalism, Free Press, New York.

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Department of Management, School of Business Administration, Loyola University Chicago, 820 N. Michigan Avenue, Chicago, IL, USA

    John R. Boatright

Authors
  1. John R. Boatright
    View author publications

    You can also search for this author in PubMed Google Scholar

Rights and permissions

Reprints and permissions

About this article

Cite this article

Boatright, J.R. Teaching Finance Ethics. Teaching Business Ethics 2, 1–15 (1998). https://doi.org/10.1023/A:1009788201729

Download citation

  • Issue Date:

  • DOI: https://doi.org/10.1023/A:1009788201729

Search

Navigation