PRIN.OF CORPORATE FINANCE
13th Edition
ISBN: 9781260013900
Author: BREALEY
Publisher: RENT MCG
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Chapter 1, Problem 11PS
Summary Introduction
To discuss: The unethical corporate practice that is criticized as unethical.
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Which of the following places more pressure on ethics officers to monitor financial and sales reporting?
A
B
с
D
E
Sarbanes-Oxley Act
Federal Sentencing Guidelines for Employees
Ethics Officer Responsibility Act
Sherman Antitrust Act
Enron Financial Responsibility Act
CHAPTER SUMMARY Ethical issues in finance are important because they bear on our financial well-being. Ethical misconduct, whether it be by individuals acting alone or by financial institutions, has the potential to rob people of their life savings. Because so much money is involved in financial dealings, there must be well-developed and effective safeguards in place to ensure personal and organizational ethics. Although the law governs much financial activity, strong emphasis must be placed on the integrity of finance professionals and on ethical leadership in our financial institutions. Some of the principles in finance ethics are common to other aspects of business, especially the duties of fiduciaries and fairness in sales practices and securities markets. However, such activities as insider trading and hostile takeovers raise unique issues that require special consideration. Insider trading is prohibited because it involves trading of information not publicly available or…
What do ethics and ethical behavior have to do with finance? What can be considered as ethics in Finance? What can impact negatively onto these ethics? Discuss why ethics is important in the finance industry and examine how using an ethical framework for decision making can help people working in the industry to make more ethical decisions
Chapter 1 Solutions
PRIN.OF CORPORATE FINANCE
Ch. 1.A - Prob. 1QCh. 1 - Investment and financing decisions Read the...Ch. 1 - Investment and financing decisions Which of the...Ch. 1 - Prob. 3PSCh. 1 - Prob. 4PSCh. 1 - Prob. 5PSCh. 1 - Corporate goals We can imagine the financial...Ch. 1 - Maximizing shareholder value Ms. Espinoza is...Ch. 1 - Opportunity cost of capital FH Corp. continues to...Ch. 1 - Prob. 9PS
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- How do the concepts of cognitive dissonance and organizational/ethical dissonance relate to whether an accountant might choose to blow the whistle on corporate wrongdoing?arrow_forwardEconomics (a) Which would you choose as the priority for ethical behaviour in the accounting profession: “protect the public interest” or “protect the credibility of the profession?” Explain, providing an example. (b) Explain the affiliation between the fiduciary relationship and conflict of duties when a professional accountant provides a service to a client. Provide an examplearrow_forwardEconomic consequences of accounting standard-setting means: a. standard-setters must give first priority to ensuring that companies do not suffer any adverse effect as a result of a new standard. b. standard-setters must ensure that no new costs are incurred when a new standard is issued. c. the objective of financial reporting should be politically motivated to ensure acceptance by the general public. d. accounting standards can have detrimental impacts on the wealth levels of the providers of financial information.arrow_forward
- Explain the links between stock price, intrinsic value, and executive compensation Discuss the importance of business ethics and the consequences of unethical behavior.arrow_forwardHow does the Sarbanes–Oxley Act contribute to accurate and quality financial reporting by public corporations? Why is the act considered an excellent example of public corporations meeting a key ethical standard? To support responses, provide examples of companies that were negatively affected by a lack of ethical guidelines.arrow_forwardDiscuss the importance of ethical behavior in accounting and the consequences of unethical behavior.arrow_forward
- how does being unethical in the financial industry affect communication with clients?arrow_forwardThe IESBA Code of Ethics for Professional Accountants highlights a number of areas in which threats might arise to independence and objectivity. Required; i. Explain what is meant by an advocacy threat and give an example of a situation which may create an advocacy threat. il. State the category of threat that arises from an inappropriately close business relationship with a client and give two examples of close business relationships that would cause such a threat. 2. Explain the terms "accountancy', "stewardship' and "agency' and explain how they can be applied to the relationship between directors and shareholders.arrow_forwardMr. Bader is leaving the accounting practice to become the Finance Director of a client company. The ethical dilemma he is most likely to face would be a. Objectivity b. Integrity c. Professional Behavior d. Confidentialitarrow_forward
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