What are ethics? Merriam-Webster offers these definitions: “the discipline dealing with what is good and bad and with moral duty and obligation” and “a set of moral principles.” In the world of high finance, ethics has its own distinct definition that’s connected with the appropriate use of money, whether it’s one’s own money or someone else’s.
Corporate finance, according to Investopedia.com, refers to “how corporations deal with funding sources, capital structuring, and investment decisions.” Corporate finance focuses on “maximizing shareholder value through long and short-term financial planning and the implementation of various strategies. Corporate finance activities range from capital investment decisions to investment banking.” In short, corporate finance is about where an organization gets its money from and how it decides to use that money.
Public Demand for Ethical Investment Choices
One prominent example of how ethics ties in with corporate finance is the South Africa divestment movement. In the mid-1980s, when South Africa was still under the segregationist apartheid system, American university students targeted U.S. companies that did business in South Africa in an effort to bring the apartheid system down. Participants in this divestment campaign pressured their own universities to divest from those companies. The idea was to compromise the finances of South Africa enough so that it had no choice but to change. The effort worked.
By 1990, more than 200 U.S. companies had divested from South Africa, taking with them $1 billion worth of investment from that country’s economy. Clearly, those businesses had gotten the message from the student-led university divestment and chose to do business elsewhere. Even if their motive for doing so was financial, the companies’ actions constituted an ethical use of financial capital.
Today, there are published lists of companies that embody socially responsible investing, or SRI. These lists tend to automatically eliminate any businesses connected with weapons, tobacco, alcohol, adult businesses, nuclear power, and coal, to name a few. Companies that focus on sound environmental policies, social responsibility, and strong governance are more likely to make the list.
It’s not unusual for customers, investors, and even the general public to renounce and boycott companies that run afoul of these principles. Conversely, those that adhere to them can reap significant financial rewards. For this reason, anyone involved in corporate finance today must have a firm foundation in ethics.
Insider trading is one of the most common ethical issues in finance. Insider trades involve the buying or selling of stocks and securities using information that has been shared but is not publicly known. An insider is often someone in a management function of a corporate entity or an individual with whom they share information for their own benefit.
Many laws against insider trading in the United States came about following the stock market crash of 1929, which marked the beginning of the Great Depression. A spate of business mergers in the 1980s sent a lot of money flowing through the stock market. This is when selling (versus sharing) insider information was outlawed.
Former investment banker Ivan Boesky was involved in one of the most notorious insider trading cases in U.S. history. During the 1980s, Boesky accumulated an estimated $200 million by trading on corporate takeovers and mergers using information that was not publicly known. In exchange for helping the U.S. Securities and Exchange Commission (see more below) incriminate other corporate insiders who were under investigation, Boesky received a short prison sentence, a fine of $100 million, and a lifetime ban from working in securities. His name became synonymous with corporate greed.
Many financial scandals with big names attached to them would follow, including Enron, Worldcom, Bernie Madoff, and Jordan Belfort, who wrote the best-selling memoir The Wolf of Wall Street. Ethics may always be an issue in the world of high finance, but efforts are being made to stem the flow of money under illegal or immoral circumstances by outwardly legitimate parties.
Ethics Codified in Corporate Finance
Today, many American corporations and financial markets have adopted ethical codes, typically established by agencies such as the Securities and Exchange Commission (SEC), one of the top regulatory agencies for the securities industry. This agency implements federal laws and regulations that deal with the ethical conduct of businesses and individuals operating within the securities field. In addition, many companies have set up their own ethics offices to self-govern their financial conduct.
Online Master of Business Administration with a Concentration in Finance Degree
Our online Master of Business Administration with a concentration in Finance program helps you develop the marketable operational knowledge and leadership skills you need to advance in many rewarding corporate careers, including:
- Chief Financial Officer
- Financial Manager
- Senior Financial Analyst
- Management Analyst
- Securities, Commodities, and Financial Services Sales Agent
Under the guidance of the same distinguished faculty members who teach the program on The University of Texas Permian Basin’s campus—including successful business professionals—you’ll discover how to:
- Analyze and interpret various types of financial information.
- Successfully navigate multiple aspects of investment, economics, and accounting.
- Think strategically.
- Nurture your business acumen.
- Apply your knowledge in real life in a variety of professional fields.
- Make ethical decisions in the corporate setting.
We offer our MBA Finance program through our College of Business, one of the select business schools in the nation (and the only one in the Permian Basin) to be accredited by the prestigious Association to Advance Collegiate Schools of Business (AACSB International). This is a distinction that only 5% of schools granting business degrees worldwide have received.
Advantages of Our Online Programs
Our Master of Business Administration with a concentration in Finance degree, and many other programs that UT Permian Basin offers, is presented 100% online through asynchronous courses. This format enables you to complete your coursework anywhere, 24/7, on your own schedule. If you’re already working and/or have ongoing family responsibilities, you’ll find this flexibility to be a tremendous advantage. Our program also features accelerated time to completion (as little as 15 months), eight-week courses, and six start dates per year. When you’re finished, it provides a respected educational credential that can help you in your present and future professional endeavors.
Prepare for the world of finance with a strong foundation. An MBA with a concentration in Finance from UT Permian Basin is the place to start.