Financial Ethics: A Positivist Analysis by George A. Aragon

Financial Ethics: A Positivist Analysis

byGeorge A. Aragon

Hardcover | November 24, 2010

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Financial Ethics: A Positivist Analysis provides a framework for the study of financial ethics built on a broad review of mainstream scholarly research published in refereed finance and economics journals. The work is aimed directly at financial academics and students who are likely to befamiliar with mainstream financial economics research. It demonstrates that ethics is already an important part of financial research, and therefore the approach taken is more of a "rediscovery" of the ethical dimension of financial economics. This approach is important not only to remind fellowacademics that ethics is a legitimate area of interest to positive financial economics, but also to encourage them to convey this message to their students without departing from mainstream financial theories and models.A distinctive feature of the text is that it adopts a positivist framework for the field of financial ethics. The text proposes that many "finance" problems are actually "ethics" problems; and that many economic phenomena such as monitoring, bonding, certification, signaling, incentive contracts,and governance structures can be explained as mechanisms for controlling moral risks. The text discusses several examples in which an ethics-centered approach to understanding economic phenomena is similar in spirit to other frameworks which have been applied in positive financial researchincluding: the framework used for understanding corporate governance mechanisms as devices for mitigating agency costs and "moral hazards" in contractual relationships; the transaction "governance structure" framework that can explain the existence of hierarchies relative to markets whenopportunistic behavior is assumed; and the roles of reputation and corporate culture in making credible commitments of trust in exchange. These "financial ethical technologies" are not mutually exclusive but, rather, mutually enriching ways to deepen our understanding of the same economic phenomena. They are financial technologies because they enhance economic value, and they are ethical technologies because their value enhancingcontributions are produced by mitigating moral risks in exchange.

About The Author

The late George Aragon was Associate Professor of Finance at Boston College and Finance Department Chairman and Chairman of the Ethics Initiative Committee in the Carroll School of Management.

Details & Specs

Title:Financial Ethics: A Positivist AnalysisFormat:HardcoverDimensions:160 pages, 5.71 × 8.19 × 0.79 inPublished:November 24, 2010Publisher:Oxford University PressLanguage:English

The following ISBNs are associated with this title:

ISBN - 10:0195305965

ISBN - 13:9780195305968

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Extra Content

Table of Contents

Preface1. Normative and Positive Approaches to Financial Ethics1.1 A Working Definition of Financial Ethics1.2 Financial Ethics and Business Ethics1.3 Organization of the Book2. Financial Ethics as a Field of Study2.1 Inevitable Interconnections Between Finance and Ethics2.1.1 The Expanding Domains of Economics and Ethics2.1.2 The Evolution of Financial Economic Research2.1.3 Financial Scandals2.1.4 Investor Activism2.2 Evidence of Academic Interest in Financial Ethics2.3 Challenges to the Integration of Ethics and Finance2.4 The Finance is Value-Free Argument2.5 Framework for Financial Ethics2.6 Conclusion3. Elements of a Positive Financial Ethics3.1 Ethical Expectations and Economic Value3.2 Ethical risk3.3 Ethical risk and Perfect Competition3.4 Ethical Risk and Imperfect Competition3.5 Positive Financial Ethics: An Illustration from Game Theory3.6 How Variation in Ethical Expectations May Affect the Trust Game3.6.1 Group Size3.6.2 Intrinsic Motivations3.7 Conclusion4. The Ethical Technologies of Finance4.1 Introduction4.2 Financial Ethical Technologies4.3 Overview of Ethical Technologies4.4 Instrumental Ethical Technologies4.5 Procedural Technologies4.6 Expressive Technologies4.7 Ethical Technologies in the Concept of Discriminating Alignment4.8 Conflicts Among the Ethical Technologies4.9 Conclusion5. Studies on the Incidence of Expropriation5.1 Ethical Risks and Capital Markets5.2 Economic Performance Across Countries5.2.1 Sovereign Expropriation Risk5.2.2 Trust and Expropriation Risk5.3 Ethical Risks and Corporate Finance5.3.1 Expropriation Risk Across Countries5.3.2 Expropriation Risk Across Firms5.4 Intra-Shareholder Expropriation5.4.1 "Sharking" and "Tunneling"5.4.2 Multiple Share Classes5.4.3 "Greenmail"5.4.4 Insider Trading5.5 Expropriation from Other Stakeholders5.5.1 Expropriation from Employees5.5.2 Expropriation from Markets5.6 Summary6. Financial Research Relating to Trust6.1 Trustworthiness6.2 Trust and the Prisoner's Dilemma6.3 Trust and Group Size6.4 Trust and Principal-Agent Relationships6.5 ConclusionReferences