What will happen if the companies are not obeying to the financial ethics?

 Before we find the answer to the question mentioned in the title, let us analyze the real meaning of financial ethics. Financial ethics means the act of the shareholders and stakeholders being ethical in the company. These include the act of being honest, justice, fair, true, and full of integrity. If an employee is said to be unethical in terms of finance, he or she might not be honest, fair, telling the truth or being truthful, or having integrity. There are seven principles in ethics. These include beneficence, health maximization, efficiency, respect for autonomy, justice, proportionality, and non – maleficence.

It is very important for the shareholders to be ethical in the company in terms of finance. This is because when the shareholders and the stakeholders comply with all the financial ethics properly, the public who are the customers will have good intention and thought about the specific company which this thought can help to improve the business performance of the company.

Apart from getting more support from the public people, there are high chances for the number of investors to be increasing. Briefly, more investors will be interested and will have the faith on the specific company to carry out the investment activity in the specific company. The investors will obtain more confidence level in the global capital markets and the company can get a good name worldwide. Eventually, the company will benefit in terms of generating good amount of revenue.

Do you know that it is very important to be ethical and there are companies being unethical and causing issues in terms of finance and company growth? Do you know there are several companies involved in financial ethics? There are cases too. According to the case studies, there were quite a number of cases too. These include McKinsey and Its Opioids Scandal, the Ethics of China’s Zero Covid Policy, the EU Taxonomy, the Case of Danske Bank, Money Laundering, Raj Rajaratnam and Insider Trading, Municipal Reinvestment Case, and many more similar cases (Seven Pillars Institute, 2022).

There are many issues related to financial ethics among companies not only in Malaysia but also in other countries.

It has been reported in the online newspaper, CBS NEWS on 13th April 2022 by the author Khristopher J. Brooks that “McKinsey consulted on opioids for the FDA – and also with opioid makers, report claims”. Briefly, it has been stated that the company, McKinsey had gone through the financial ethic issue when the company had paid about $573 million with the aim of helping the opioid creators to advertise their drugs in America. McKinsey knows the consequences of drugs, but McKinsey supported it by providing financial aid. This has caused the public people to lose faith in the company which has caused the business performance of the company to become worst (Brooks, 2022).



Then, it has been also reported in the online official website, Seven Pillars Institute that there was a financial ethic issue in the year 2009 involving Raj Rajaratnam and Insider Trading. Raj Rajaratnam was the New York hedge fund manager was charged with fourteen counts of securities fraud as well as conspiracy. He was found guilty when he supposedly planted a system of executives at Intel, McKinsey, IBM, and Goldman Sachs. Due to this issue, he lost his job as well as his good name among the public people (Seven Pillars Institute, 2022).


I believe once you read my blog, you will understand the importance of being ethical in the company in terms of finance. Getting a good name from the public people is very important to sustain in the market for the longer term. 


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