Course description

Title of the Teaching Unit

Ethics in Finance

Code of the Teaching Unit

22MAF20

Academic year

2024 - 2025

Cycle

Number of credits

Number of hours

Quarter

Weighting

Site

Montgomery

Teaching language

English

Teacher in charge

DUMAS Christel

Objectives and contribution to the program

The Ethics in finance course pursues the following objectives:
• Provide students with a sound knowledge of ethics in finance, providing them with tools to move beyond an intuitive conception of ethics
• Apply theoretical concepts studied in class to concrete cases, teaching students to make ethical decisions.
• Train students to analyze ethical dilemmas in the news.
• Develop a critical perspective on ethics in finance, without being naive and/or cynical.
• Analyze “ethical dilemmas” in the news
• Develop future managers’ social skills within corporations: sense of consensus, negotiation skills, argumentation.
• Express and communicate one's thoughts in a coherent and structured way
• Formulate problems correctly and suggest potential solutions referring to different theoretical models

Furthermore, as it prepares students for the CFA exam, it has the following learning goals. The student should be able to:
1. explain ethics (level I);
2. describe the role of a code of ethics in defining a profession (level I);
3. identify challenges to ethical behavior (level I);
4. describe the need for high ethical standards in the investment industry (level I);
5. distinguish between ethical and legal standards (level I);
6. describe and apply a framework for ethical decision making (level I)
7. compare interests of key stakeholder groups and explain the purpose of a stakeholder impact analysis (level II);
8. discuss problems that can arise in principal–agent relationships and mechanisms that may mitigate such problems (level II);
9. discuss roots of unethical behavior and how managers might ensure that ethical issues are considered in business decision making (level II);
10. compare the Friedman doctrine, Utilitarianism, Kantian Ethics, and Rights and Justice Theories as approaches to ethical decision making (level II);
11. describe the structure of the CFA Institute Professional Conduct Program and the disciplinary review process for the enforcement of the CFA Institute Code of Ethics and Standards of Professional Conduct (level III);
12. explain the ethical responsibilities required by the Code and Standards, including the sub-sections of each standard (level III)

Prerequisites and corequisites

none

Content

Topic 1: What is ethics in finance? Definition, purpose, ethical decision-making theories and frameworks (weeks 1 & 2)

Topic 2: Why do financial scandals occur? The roots of unethical behavior, Agency theory, conflicts of interests, cognitive biases and stakeholder analysis. (weeks 3 & 4)

Topic 3: How to prevent unethical behaviour/financial scandals? (weeks 5 & 6)

Part 4 – What are the most common ethical challenges in Personal / retail finance (weeks 7)
Part 4 – WHAT are the most common ethical challenges in Financial markets. Insider trading, hostile takeovers, derivaties, HFT…(weeks 8)
Part 4 – WHAT are the most common ethical challenges in the Investment industry? Fund management, SRI, microfinance,…(weeks 9)
Part 4 – WHAT are the most common ethical challenges in corporate governance. Commitment to Ethics by Firms, Hiring and Promotion, Organizational Culture and Leadership, Decision-Making Processes, Strong Corporate Governance, Moral Courage, Ethics Officers (weeks 10)

Teaching methods

Students will receive theoretical content before hand (slides, videos, articles) such that our time in class is devoted to discussions and debate, in particular regarding ethical financial dilemmas.

Assessment method

Students are assessed on
1. Participation in the classroom (case study, ethical question, debates)
2. Case study
3. Exam : oral exam open questions with small practical cases

References

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