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25602 Ethics in Finance

Warning: The information on this page is indicative. The subject outline for a particular session, location and mode of offering is the authoritative source of all information about the subject for that offering. Required texts, recommended texts and references in particular are likely to change. Students will be provided with a subject outline once they enrol in the subject.

Subject handbook information prior to 2019 is available in the Archives.

UTS: Business: Finance
Credit points: 6 cp

Subject level:

Undergraduate

Result type: Grade and marks

Requisite(s): 25556 The Financial System
These requisites may not apply to students in certain courses.
There are course requisites for this subject. See access conditions.

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 are useful to students in their place of work as a framework for ethical conduct in the investment profession is presented 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 Wall Street, this subject explains the importance of ethics in the operation of financial institutions and in the personal conduct of finance professionals.

Subject learning objectives (SLOs)

Upon successful completion of this subject students should be able to:
1. explain 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 accountability, and international businesses
4. analyse, interpret and apply the CFA Institute Standards of Professional Conduct and recommend practices and procedures designed to prevent violations of ethical and professional practices related to financial analysis, investment management, and financial market trading.

Contribution to the development of graduate attributes

The subject contributes to the aim of preparing students to commence a fulfilling and effective career in business, especially in finance professions, such as investment management, portfolio management and financial planning. In particular, the subject:

  • provides the intellectual basis for students to foster ethical and sustainable decision making in their future workplace through analysis and application of ethical theories and relevant financial theory to real world ethical dilemmas in finance,
  • exhibits a strong contribution isguidedbytheCFAInstituteCodeofEthicsandStandardsofProfessionalConduct,
  • develops and improves critical personal skills required in the workplace which include awareness, management, and resolution of ethical issues and conflicts of interest in finance.

More specifically, this subject contributes to the development of the following graduate attributes:

  • critical thinking, creativity and analytical skills through discussion and analysis of case studies that illustrate the importance of sustainable and ethical decision making in the workplace, e.g. in the financial services industry in Australia and overseas,
  • attitudes and values through the study of ethical theories and frameworks of professional conduct that can be employed to solve problems resulting from ethical dilemmas in business and finance.
  • business practice oriented skills through case studies and simulations of real life, workplace relevant challenges to ethical decision making and through in-class industry presentations and discussions with industry professionals.

Teaching and learning strategies

A range of teaching strategies are used to pursue the subject’s purpose, which is to provide an understanding of real ethical problems faced by finance professionals and their resolution. The strategies include:

  • Student learning is achieved through integration of the subject’s content with relevant professional practice in an international context which is supported by a range of active learning experiences, which include:
    • discussion of hypotheticals following in-class online polls,
    • individual and group class exercises (as preparation for lectures, as well as in class simulations), including solving ethical dilemmas in business and finance based on real life cases of ethical misconduct.
    • case studies, which students prepare before coming to class using resources that include news contributions, videos, regulatory rules and related opinions, and latest academic research (sources are provided on UTS Online and through the UTS library reserve material)
    • role plays to simulate business decision making at the individual’s and business organisation level.
  • Guided learning is fostered by the study of theories, cases, concepts and applications outside class time using online (media supported) and offline (reading assignments).
  • The student learning experience develops throughout the semester along a set of rigorous academic learning goals which aim at fostering students’ cognitive ability to engage in moral reasoning.
  • Student learning is driven by students’ critical examination and questioning of solution approaches to ethical dilemmas using cutting edge academic research and learning tools.
  • Importantly, the subject encourages students to test their ideas and approaches to solve ethical dilemmas and provides feedback to facilitate responsible decision making in business and finance contexts. For example, students simulate in role plays business situations or transactions that exhibit potential conflicts of interests. Afterwards, students are being provided with feedback regarding their ability to identify and manage ethical dilemmas, as well as regarding the moral impact of the outcome situation/transaction on individuals involved and the greater community and society.

Content (topics)

  • Ethics in the world of business.
  • Welfare, rights, and justice.
  • Equality, liberty, and virtue.
  • Whistle-blowing, trade secrets and conflict of interest.
  • Topics in ethics in finance.
  • Corporate social responsibility and accountability.
  • International business ethics.
  • CFA Institute Standards of Professional Conduct – professionalism; integrity of capital markets; duties to clients; duties to employers; investment analysis, recommendations and actions; conflicts of interest.

Assessment

Assessment task 1: Quizzes (Individual)

Objective(s):

This addresses subject learning objective(s):

1, 2 and 3

Weight: 50%
Criteria:

Assessment is based on the following criteria:

  • Accuracy of response
  • Appropriate assumptions underpinning response
  • Clarity of response to open answer questions

Assessment task 2: Final Exam (Individual)

Objective(s):

This addresses subject learning objective(s):

4

Weight: 50%
Criteria:

The final exam assesses students’ understanding of the theoretical and practical reasons for ethical principles and professional standards of conduct and the application of these principles and standards to practical problems.

Minimum requirements

Students must achieve at least 50% of the subject’s total marks.

Required texts

Required textbook:
Boatright, J.R. 2012. Ethics and the Conduct of Business (7th ed.), Pearson Prentice Hall, NJ, USA.

Required handbook:
Standards of Practice Handbook (11th ed.), CFA Institute, Charlottesville, VA, USA.
Free handbook download (PDF and ebook): http://www.cfainstitute.org/learning/products/publications/ccb/Pages/ccb.v2014.n4.1.aspx

Other resources

In this subject UTSOnline is used at level 2 for communicating information and for facilitating un-moderated discussions. The course coordinator and lecturer will not respond to questions or comments made on the discussion boards, but you may use the discussion board facility to talk with other students as you wish.

UTSOnline will be used to support your studies as follows:

  • Announcements about this subject will be posted regularly by the subject coordinator
  • To provide electronic copies of subject materials such as subject outline, lecture notes, PowerPoint slides and subject documents
  • To provide links to other digital resources and websites
  • To talk with other students about your studies and share resources or ideas
  • To post students' marks to the gradebook