Code of Ethics Harvard Case Solution & Analysis

1)      People affected:  stokeholds/stakeholders

a)      Promoting ethics

Promoting ethical behavior throughout the conduct of the business is very difficult and there are many situations where the individuals will be required to act unethically. Promoting ethical behavior involves the incorporation of corporate code of conduct and to adopt an awareness campaign in order to highlight any misconduct (Robinson, 1983).

Promoting ethics involves the implementation of integrity and objectivity in the conduct of the business operations and involves an establishment of ethical culture, which will enhance the stock holder’s confidence and provide them an opportunity to invest more in the capital market, hence, providing an opportunity of economic growth (Drucker, 1981).

Ethical culture can be promoted through professional competence where members do not only obtain sufficient knowledge about the capital market but to continuously update such information, so that they can provide services to their investors based on the latest information about the capital market. Further, professional members are also required to behave professionally and should avoid any action that can discrete its profession.

b)      Adopt a code of ethics

The code of ethics requires their members to act with integrity, diligence and maintain good relations with working colleagues in investment profession and with clients in global capital market. Further, it also requires individual to consider the interest of the clients beyond their own personal interest because employees owe fiduciary responsibility to promote the interest of the stock holder and to take actions that will enhance their value.

Members are also required to exercise independent judgment and use reasonable care while making investment decisions and to promote the integrity and viability in the global capital market, which will benefit the whole society. Members are required to have sufficient knowledge of laws and regulations and always consider to promote it in the conduct of its business and always discourage its violation.

Members always promote independence and objectivity in its professional activities and do not accept any material gifts or benefits that will affect their decision. Further, members are also required to avoid any misrepresentation in investment analysis and recommend them that are in their long term benefit. Moreover, they do not involve in any unethical practices like fraud, criminal act and dishonesty; which may impact them and their whole profession (Erwin, 2011).

Members owe a responsibility towards their clients to respect the confidentiality of information, they have gained in the course of its business and do not disclose it any other parties; which can harm them in the long run. Further, members do not engage in distorting prices or artificially inflate trading volume that may mislead market applicants.

c)      Take about ethics with employees

Promoting ethical behavior throughout the conduct of the business is difficult for the employees because there may a possibility that their personal interest may be compromised while promoting the ethical behavior, which may lead them to behave unethically. If the peoples fail to act unethically then they are going to be significantly affected i.e. they may lose promotions, lose pay increase, bonuses and other management incentives, so it may tend them to behave unethically.

The organizations are concerned about increasing their profits, which may lead them to show false financial reporting that will attract the investors and tend them to invest in the company. Stocks are one of the major concerns for the promotion of unethical behavior, where the employees are granted specific stock in the company for achieving the specific results and employees in order to gain personal interest, presents a false financial reporting (Frankel, 1989).

There is no doubt that employees have conflicting interest with the shareholders, so it is very important for the organization to determine the conflicting objectives regularly and implement actions so as to reduce it to an acceptable level. The conflicting objective can be categorized on the basis of materiality, i.e. if there are any material conflicting objectives between employees and investors then the organization shall consider to avoid it completely but on the other hand if there are immaterial conflicting objectives between employees and investors then the organization shall consider to adopt specific hurdles in order to reduce the interest to an acceptable level.

d)      Discuss examples or sienna

Professionals face ethical issues in the performance of its duties and the business ethics are the principles, which provide guidelines to the individuals in the performance of its duties. There are major conflicting objectives between shareholders and employees, so business ethics provide specific guidelines in order to avoid the conflict of interest....................................

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