Investment Ethics / Edition 1 available in Paperback
The recent economic crisis further underscores the importance of ethics, which is why finance professionals will turn to this authoritative text. It provides them with an applied and practical understanding. Critical thinking questions offer more thought provoking exercises to get them to learn the material. Related cases in the chapters help spark more thoughtful analysis of the issues that are raised. Numerous projects show how to apply investment theory and analysis as well as integrate ethical considerations. Appendices are also included in relevant chapters that review basics in investments and accounting. This material will help finance professionals examine the ethical practices of the companies and organisations they recommend.
|Edition description:||New Edition|
|Product dimensions:||7.40(w) x 9.20(h) x 0.50(d)|
Table of Contents
PREFACEPART I- Ethical BehaviorCHAPTER 1- Introduction: The Case for Investment Ethics Introduction-The Investment Industry- A Legacy ofScandals and a Need for Ethics A Brief Overview of the Investment Industry Securities Laws and Regulations Investment Ethics Are Easier Said Than Done Ethics Basics Four Fundamental Principles of Investment Ethics Costs and Benefits of Being Unethical Conclusion-Developing an Ethical Consciousness Appendix- Financial Market Regulatory AgenciesCHAPTER 2- Fiduciary Duty of Investment Professionals- TheEthical Treatment of the Client Introduction- What is A Fiduciary? Agency Versus Fiduciary Relationships The Role of Laws, Regulations, and ProfessionalStandards The Importance of Confidentiality Conflicts in Finding the Right Investments Conflicts in Trade Management- Best Execution Conflicts in Trade Management- Soft Dollars Identification and Fair Treatment of Clients Conclusion-Disclose! Disclose! Disclose! Appendix- Professional Codes of EthicsCHAPTER 3-Ethical Reporting of InvestmentPerformance Introduction to Ethics in Reporting Performance Calculating Return: Predicting Future Performance orMeasuring Performance for Current Clients? Ethical Reporting of Risk Measures Management Fees and Other Costs That Can Be Hidden Time Periods Used to Estimate Historical Risk & ReturnPerformance Other Ways to Distort Historical Performance Reporting Performance to Attract New Clients- Cherry PickingAccounts Hidden Risks: Leverage, Short-Selling, Liquidity Special Considerations with Valuing Securities thatDon’t Trade Conclusion- The Crystal Ball Appendix- Review of Investments BasicsCHAPTER 4-Ethical Use of Information Introduction- Information and The Search for Alpha Information Asymmetry Private Information-Talent Trading On Inside Information Trading on Trading by Insiders Influential Publications Direct Communication with Corporations Investment Banking and Chinese Walls Mosaic Theory Front Running High Speed “Flash” Trading Mutual Funds And Information Advantages Arising From StalePrices Market Manipulation Conclusion- Information And FairnessCHAPTER 5-Analyst Integrity Introduction- Analysts and Their EthicalObligations Investment Recommendations-“Pickers” Forecasters Buy Side and Sell Side Analysts- Who pays for theresearch? Behavioral Finance and Analyst Ethics Star Analysts- Overconfidence and Regret Aversion Herding -The Influence of Other Analysts Other Behavioral Pitfalls Originality of Ideas Other Analyst Conflicts Conflicts with Employers Conclusion- Be Aware!PART II- Ethical Security AnalysisCHAPTER 6-Investing in Companies with Ethical AccountingPractices Introduction- Reported Accounting Performance- HealthyCynicism The Source of Accounting Distortions-Accruals Discretionary and Non-Discretionary Accruals Managers’ Incentives to Manage Earnings “Cookie Jar” Reserves and “BigBaths” Aggressive Revenue Recognition SPE’s and Hidden Debt Quality of Earnings Earnings Smoothing: Is It Ethical? Conclusion- Cash Versus Accruals- Be Skeptical!CHAPTER 7-Investing in Companies with Good Corporate GovernancePractices Introduction-Corporate Governance and its Importance toEthical Analysts Countrywide Financial Corporation- A Case of Weak CorporateGovernance and Unethical Business Practices The Role of the Board- An Overview Who Makes a Good Director? Effective Board Structure Director Compensation and Shareholdings The Nominating Process, Voting Rights, and PotentialConflicts Executive Compensation- Structure and Incentives Option Grant Abuses Golden Parachutes, Golden Hand-cuffs, Golden Coffins Horizon Problems And The Firm’s Long-RunProfitability Shareholders’ Rights and The Takeover Market Conclusion- Shareholder’s Rights and Conflicts Appendix- Review of Stock OptionsCHAPTER 8-Socially Responsible Investing Introduction- Directing Financial Capital to BenefitSociety Stakeholder Theory Positive and Negative Screens Socially Responsible Mutual Funds Performance- Can You Do Well By Doing Good? Shareholder Advocacy Divestment The Special Role of Pension Funds, University Endowments, andFoundations Community Investing and Micro Finance Lending Islamic Finance Conclusion- Obstacles To Doing Well While Doing GoodCHAPTER 9-Cases Case #1- UBS and Morgan Stanley- An Elaborate InsiderTrading Scheme Case #2- Emulex and Mark Jakob- Market Manipulation withFalse Information Case #3- Fidelity Traders and Gifts from Jefferies-Soliciting Brokerage from Traders Case #4- Heartland Advisors and Bond Funds- Misrepresentationof Bond Values Case #5- A.G. Edwards and Variable Annuities- AnInappropriate Investment Case #6- Charles Hintz and Sanford Bernstein- Analysts’Conflicts with Personal Holdings Case #7- Nicholas Cosmo and Agape World Inc.- A PonziScheme Case #8- Former CEO of NYSE’s, Grasso’s, Pay Package Case #9 Nick Leeson and Barings Bank- Rogue Trader Case #10- Kellogg’s “Matched” and“Washed” Trades- Tax Avoidance or MarketManipulation? Case # 11- Qwest Communications International - AccountingFraud and Overstated Revenues Case #12- Refco- Misrepresentation and Hidden Debt Case #13- Salomon Brothers and the Treasury Market- Corneringthe Market Case #14- Merrill Lynch and the Internet Boom-Analysts’ Conflicts Case #15- John Mangan and Short Selling -Inside Trading Case #16- Merrill Lynch and Bank of America Merger- BonusesPaid to Merrill Employees -Excessive Compensation? Case #17- Canary Capital Partners LLC- Mutual FundAbuses Case #18- Jérôme Kerviel and SociétéGénérale- Rogue Trader Case #19- WorldCom- Capitalizing Operating Expenses, anUnethical Accounting Practice Case #20- The Squawk Box- Front Running Case #21- Morgan Stanley- Brokerage Commissions and BrokerageAbuses Case #22- Brian Hunter and Amaranth Advisors-Marketmanipulation of Natural Gas? Case #23- The Bayou Group- False Reporting Case #24- Morgan Stanley- Analyst’s Coverage andInvestment Banking Business Case #25- Bernie Madoff- The Largest Ponzi Scheme inHistory? Case #26 - Enron- A Case of Extreme Hubris Case #27- UnitedHealth- Back Dating Stock Options Case #28- First Cash Financial Services- Pay Day Loans andReturn Case #29 - Johnson & Johnson and the Tylenol Scare- DidRecall Hurt or Help Shareholders? Case #30- Infrastructure Funds- An SRI Investment?GLOSSARY