Faculty of Business: Finance and Economics
Credit points: 6 cp

Subject level: Undergraduate

Result Type: Grade and marks

Requisite(s): 25503 Investment Analysis

Handbook description

Ethical practices instil a public trust in the fairness of markets, allowing them to function efficiently. Additionally, ethical practices by finance and investment professionals benefit all market participants and stakeholders and lead to increased investor confidence in global capital markets. The perspectives acquired in this subject should be useful to students in their place of work as this subject presents a framework for ethical conduct in the investment profession by focusing on the CFA Institute Code of Ethics and Standards of Professional Conduct. Citing examples of the scandals that have shaken public confidence in the ethics of participants in financial markets, this subject explains the importance of ethics in the operation of financial institutions and in the personal conduct of finance professionals.

Subject objectives/outcomes

On successful completion of this subject students should be able to:

1. Demonstrate a thorough understanding of the major intellectual theories of ethics as a basis for the analysis and resolution of ethical dilemmas in finance.
2. Critically examine ethical standards and issues of questionable professional conduct in finance by addressing topical issues related to ethics in investment decisions, financial markets and financial services.
3. Relate ethical principles to the financial theory of the firm including issues related to stakeholder theory, takeovers, corporate social responsibility and international businesses.
4. Demonstrate a thorough understanding of standards of professional conduct and recommend practices and procedures designed to prevent violations of ethical and professional financial market trading practices.

Contribution to graduate profile

Ethical practices instil a public trust in the fairness of markets, allowing them to function efficiently. In short, good ethics is a fundamental requirement of the investment profession. This subject aims to allow students to develop specific skills and knowledge of ethical conduct in the investment profession. As a key aspect of this subject is the principles and guidance presented in the CFA Institute Code of Ethics and Standards of Professional Conduct, the subject provides the ethical context in which students will operate when pursuing professional careers in all related financial areas such as investments, portfolio management and financial planning.

Teaching and learning strategies

This subject will be delivered in the normal semester delivery mode, namely a two hour lecture and a one hour tutorial during the three hours assigned each week. The purpose of this unit is to provide up-to-date guidance to the people who grapple with real ethical problems in the finance profession, where theory meets practice and ethics gain meaning. As a consequence, the lectures will incorporate a range of learning strategies including lectures, case studies, class exercises and discussions. Case studies will be used as the basis for tutorials. Content for this subject will be supported by UTSOnline.

Content

• Ethics in the World of Business
• Welfare, Rights, and Justice
• Equality, Liberty, and Virtue
• Whistle-Blowing
• Trade Secrets and Conflict of Interest
• Ethics in Finance
• Ethics and Corporations
• International Business Ethics
• CFA Institute Standards of Professional Practice - Professionalism; Integrity of Capital Markets; Duties to Clients; Duties to Employers; Investment Analysis, Recommendations and Actions; Conflicts of Interest

Assessment

Mid-semester Exam (Closed Book & Individual)	35%
The examination will be an individual and closed book 90 minute exam in a multiple choice and short answer format. The examination content will address objectives 1 to 3.
Final Exam (Closed Book & Individual)	65%
The examination will be an individual and closed book three hour exam in a multiple choice, short answer and essay format. The examination content will address objectives 1 to 4.

Both examinations will assess the student's ability to understand both the theoretical and practical rationale for ethical principles and standards of professional conduct. The examinations will be conducted under University examination conditions, and hence thoroughly address concerns regarding secure assessment.

To pass the subject, students must achieve at least 50% of the final overall grade.

Recommended text(s)

Boatright, J.R. 2007. Ethics in Finance, 2nd Edition. Blackwell Publishers, UK.

Standards of Practice Handbook, 2005, 9th Edition, CFA Institute, Charlottesville, VA, USA.

Indicative references

Brown, M.T. 2005, Corporate Integrity: Rethinking Organizational Ethics and Leadership, Cambridge University Press, UK

The Center for the Study of Ethics in the Professions (CSEP) at the Illinois Institute of Technology (http://ethics.iit.edu/codes/finance.html)

DesJardins, J. 2006, An Introduction to Business Ethics, 2nd Edition, McGraw-Hill, USA

Goodpaster, K., L. Nash and H. de Bettignies, 2006, Business Ethics: Policies and Persons, 4th Edition, McGraw-Hill, USA

Hancock, J. 1999, The Ethical Investor, Pearson Education Limited, UK.

St James Ethics Centre (http://www.ethics.org.au/about-ethics/ethics-centre-articles/ethics-subjects/)