Ethical Issues in Financial Management and Corporate Governance

Ethical Issues in Financial Management and Corporate Governance

Financial ethics is a convincing area to discuss and observe the activities within the financial sector. It is the standards set that the professionals hold to operate their business and thus maintain confidence and trust with their colleagues, the public and their customers. Most careers in the financial sector interact and communicate with the customers and the public, and the money is endowed to the professionals of the financial sector so that they can help the customers generate income or find newer methods to use it with efficacy. Financial ethics is a very sensitive trust that has been violated several times and in different ways earlier. Countless news and stories exist about the professionals of the financial sector who have done fraud with organisations and individuals. After dealing with these crimes and violations, a code of ethics was later developed for financial industry professionals.

A code of ethics is defined as a set of guidelines which is planned to detain the individual who is responsible for the actions done by him and make sure that proper decisions are made by the financial professionals so that integrity and trust must be maintained. The code of ethics of an organisation, along with the Securities Exchange Commission, is discussed below.

Most business organisations and financial professionals grip themselves to similar ethical codes, which ensure that all the events are above the board when the business is being conducted.

The last few decades have encountered some very high-profile incidents and scandals that gave rise to taking actions from the government of the United States to make sure that financial organisations and professionals were given responsibility for the actions which will ultimately harm the customers and the entire nation. One of the most popular scandals was Enron, which was responsible for hiding large amounts of losses and debts so that they could have a good price on the stocks of the company while, in reality, the firm was struggling to sustain itself. Several legislation pieces have explained the professionals of financial organisations and companies must behave and should give the responsibility of protection to whistleblowers. These individuals acquire an accurate understanding of all the wrongdoings in the financial sector and call for the attention of the public and the regulators. The legislation pieces are described below, along with their impact on financial management ethics.

Ethics in corporate governance is the policy and process of an organisation that deals with the problems and hurdles concerned with the conduct and administration of everyday business. It is important to understand that organisations exist primarily to develop or manufacture a good or product which ultimately helps generate benefits for the organisation. Yet, the organisation’s intent should be balanced with taking over the control of the organisation, and this step will make sure that the organisation is getting benefits without using any domain of unethical behaviour. Earlier, most organisations have taken advantage of their market positions to hold back the competition or even give threats to the local public. Thus, ethics in corporate governance persists so that they can safeguard the public from this occurrence.

The policy of corporate governance also has to cover the conduct of the senior employees of the organisations, for instance, the Board of Directors (BoD), the Chief Executive Officer (CEO), as well as the other senior employees of the organisation who are frequently seen as free from the normal policies of the organisation or the company.
Corporate governance is considered a complicated matter subject which consists of many difficulties. One of the most significant portions of corporate governance mainly focuses on accountability, mechanisms of control and auditing, and fiduciary duty. Investors are anxious regarding the company’s earnings and performance, while bad corporate governance is considered a signal of bigger issues or complexities with the organisation. For instance, before Enron`s collapse, the organisation and its traders inflated the energy cost artificially in some of the states of the United States, which ultimately increased the organisation’s profit margins. This incident was not only responsible for the downfall of the company, but this incident made a clear and transparent indication of failing of internal controls of the organisation, which generally meant that much larger abuses than the previous one could happen in the coming times, which will eventually lead the organisation to collapse it.

Issues in Financial Management and Corporate Governance

A good financial management control policy is considered significant for better corporate governance. Most unethical practices are mainly noticed in the particular field of financial management, pressuring the governments and the regulators that affect the internal and external stakeholders.

Several unethical issues that occurred in the financial activities of the organisation are –


As the enforcement of the law is remedial and reactive, ethics is considered the very initial stage of defence against the problem of corruption. One of the main features of Corporate Governance is to make the rules and regulations for the government. It is also concerned with the values, ethics, and values of the organisations that are used to run their company. Thus, it all depends upon the trust between the organisation and various stakeholders, which lasts a long time. The failure of the company only sometimes employs good corporate governance. Yet, when good corporate governance does not persist, like the standards of governance, questionable practices and the failures of massive corporate sectors will keep occurring without any doubt. Whenever it is the time to make ethics in the company, it is very important to keep in mind the statements of the mission and vision, core values, code of conduct and general principles of business all have to work together to form good ethical management in the business. An ethical program working efficiently needs to keep focusing on the good values of the organisation. Linkages are measured to understand how the representatives will become life and thus comprehend the values and codes of association. Structure and spirit must also persist together in accurate proportion to handle and maintain the ethical climate ideally.

Author Bio: Mark Edmonds, a devoted master at Academic Assignments, is a main supplier of the UK’s best quality assignment writing services. With a unique spotlight on financial management, Mark succeeds in giving students first class financial management assignment help. His enthusiasm for moral strategic policies and corporate administration has driven him to investigate and address different difficulties in the field. As a dependable aide, Mark is focused on helping students in accomplishing academic greatness and making informed financial management and corporate administration choices.

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