Thursday, December 5, 2019
Business Ethics and Financial Reporting Ã¢â¬ Free Samples to Students
Question: Discuss about the Business Ethics and Financial Reporting. Answer: Introduction: This report shows reflect the key issues and ethical problems faced by financial people in organizations, investors in financial market and other stakeholders in financial services. With the increasing ramification of economic change, financial system helps in exchanging of funds between lenders, investors and borrowers. Ethics in financial system is related to having complete disclosure in the financial trading of business. This financial system operates at national, global and firm-specific level. Money market, credit and finance are used as media of exchange in financial system. The ethics in financial system is related to implementing financial functions effectively. For instance, Australian exchange security exchange board has passed new rules and regulations to curb the insider trading (Choi and Pae, 2011). There are several ethical issues in financial system which impacts the investors decisions and changes in market capitalization and fluctuation in business operations. Throu ghout the time, many companies have faced problems of scam, insider trading problems and cheats done by ill-intentioned persons. The main ethical problem arise when the disclosure made by listed company is not as per the listing rules and regulations and they fail to comply the listing rules and regulations. It is evaluated that all the ups and down of the share price in market is completely dependent upon the market information and companys events. If company fails to disclose the material information then it will be illegal and unethical as well (Johnson, 2009). This type of business practice in the financial system destruct the business functioning and increase the fluctuation in share price (Sorkin, 2010). These kind of problems and ethical issues in financial system arise when company try to manipulate their material information with a view to increase their overall profit. However, in short term these unethical business practice could help companies to increase their overall p rofit and market capitalization but it could put hard negative impact on the sustainability of the organization. It is evaluated that if the legal compliance and penalties (Crotty, 2009). In addition to this, if financial systems such as capital market, financial market is managed in effective manner then it could reduce the market loss for investors. However, investors should invest their money in capital subject to market risk. Each and every company should endeavor towards providing best benefits for investors. If due to their non-effective compliance if they face any problems then they should compensate their loss by providing addition benefits. Now in the end, it could be inferred that the ethical issues in financial system is related to the wrong financial practice and market making in the stocks of company. After evaluating the market financial system factors, it could be concluded that making non ethical market making could help company to increase their profit and market capitalization but it may destruct the company in long run. References Choi, T.H. and Pae, J., 2011. Business ethics and financial reporting quality: Evidence from Korea.Journal of Business Ethics,103(3), pp.403-427. Crotty, J., 2009. Structural causes of the global financial crisis: a critical assessment of the new financial architecture.Cambridge journal of economics,33(4), pp.563-580. Johnson, S., 2009. The quiet coup.The Atlantic,1. Sorkin, A.R., 2010.Too big to fail: the inside story of how Wall Street and Washington fought to save the financial system--and themselves. Penguin.