This article examines the case of institutional inertia in Japanese financial regulation, focusing on the reasons why institutions centered on informal modes of organization and interaction proved particularly The Japanese case serves as a particularly tough test for theories of institutional adaptation and change because even crisis failed to produce timely institutional change. The paper argues that informal, exclusionary and opaque relational ties served as a functional substitute for formal regulation and promoted cooperative government-bank relationships in (...) an earlier period. Yet, when the informal attributes of the system began to impede the sound functioning of the financial system, the very opacity of these ties and the informational dynamics underlying them meant that the Diet and the general public were less than fully aware of the extent of dysfunction present as time went on. (shrink)

This paper uses the bankruptcy proceedings for Enron to discuss the role of financial institutions in business transactions. Using recent work by Dixit a business transaction is portrayed as a prisoners' dilemma problem between competing firms. The financial institution's role in this world is to provide information and enforce contracts so that the parties to the business deal act cooperatively. This role is recognized in the law under the heading of Fiduciary Responsibility. In the Enron case the (...) bankruptcy examiner has argued that the Tier 1 financial institutions for Enron failed to carry out their fiduciary responsibility. As a result, the examiner has asked a fact finder to subordinate the claims of the Tier 1 financial institutions to other debt holders for Enron. (shrink)

Organizational culture and employee conduct in financial institutions are coming under increasing scrutiny by regulators who seek to identify the underlying sources of unethical behavior. The literature on ethics in the workplace has often emphasized the importance of the alignment of systems and processes with organizational values and the role of the leader in creating an ethical culture. Less is known about how individual employees experience the ethical decision-making process, especially in complex and high-risk business environments where there (...) are discrepancies between an organization’s formal ethical standards and its informal practices. This article combines ethical decision-making models with key concepts from organization and adult learning theories to develop a deeper and more nuanced view of how individuals in financial institutions deal with ethical issues that arise in their daily work. Eight practical ideas are formulated to help financial institutions narrow the gap between formal ethical standards and actual practices and develop a culture that promotes ethical behavior: challenging authority, creating opportunities for discourse, valuing positive emotion, making time for reflection, rewarding ethical behavior, strengthening escalation processes, eliciting feedback, and establishing a learning culture. (shrink)

Purpose of the article is to predict the interrelationship between the change of financial institutions loan portfolio and activities of the main economic sectors in Lithuania. Coherence between financial intermediation and economic growth cause a great interest of economists during the late decade. Prevailed opinion that banking sector is the reflection of economic growth and expansion and that its role - to intermediate in the saving and investing needs, reallocating funds between economic activities, was replaced by sentiment (...) that strong and stable banking sector could be not only the result of economic development, but also the cause of this growth. The purpose of the article is to accomplish forecast of the influence of financial institutions loan portfolio change to the main economic sectors in Lithuania for 2013-2017 period. Methodology/methods Analysis of variation of loan portfolio according economic sectors shows the tendencies of financing of various activities in the past. Regression - correlation analysis helps to identify the influence of loan portfolio changes and their impact for GDP and employment in separate economic sectors. The forecasting of different economic sectors was made using extrapolation methods and econometric method. Scientific aim: Economic situation in Lithuania forces to estimate decisions made by banking sector that influence not only individual countries but also the global economy. In this regard, there is a natural question of whether the process of underway stagnation should be judged as a timely economic development stage, or perhaps as the result of policies pursued by financial institutions? Prerequisites for the problem situation forces to overhaul loan portfolio managed by financial institutions, evaluate its change on the country's economy sectors, and to investigate these relationships forecasts. Findings: There is a strong link between financial sector development and economic growth. The results showed that the volume of loans has a very close interdependence with the GDP. Data obtained for loan portfolio forecasting for 2013-2017 showed that the growth of loans can be seen in all sectors except construction. Employment should grow only in public and retail sectors. Conclusions : The most relationship with GDP was established in retail and public sectors. Determining the correlation coefficients and regression equations between loans and employment the strongest relationship found in retail, industrial and construction sectors. The study encountered lack of data for 2012, since the information about the composition of the loan portfolio in different sectors since November 2011 is no longer provided to the Bank of Lithuania. (shrink)

This paper is focused on the ways of expressing trust and distrust in financial institutions represented in the language and speech culture of the population of the Lipetsk region. Based on 55 semi-structured interviews of three generations (centennials, millennials, elder generations) living in rural and urban settlements, issues of understanding and interpretation of financial institutions, features of trust, positive and negative experiences of interaction with various financial institutions were analyzed. The use of the constructivism (...) made it possible to interpret trust as an internal component of the practices of an agent involved in the current financial situation. The study showed that in regions with an average standard of living, an average level of financial culture and the dominance of a conservative model of financial behaviour, the difference between generations is less noticeable against the backdrop of a significant difference between residents of rural and urban settlements. The analysis of interviews with three generations of residents of the region showed that the conservative model of financial behaviour continues to be reproduced in the speech culture of the informants, where banks and insurance organizations remain the most trustworthy. The images of financial institutions, represented in the language of the interviews, revealed a high level of resentment associated with the experience of past events (the collapse of the USSR, privatization). The content analysis revealed the image of the state as a “collector of payments”, and to a lesser extent, a “helper” supporting a person in his relationship with financial institutions. (shrink)

Zusammenfassung Mit Beginn der Spielzeit 2013/14 traten alle Maßnahmen des UEFA Financial Fair Play-Konzeptes in Kraft. Vornehmliches Ziel dieses regulatorischen Eingriffs ist es, der wachsenden Verschuldungs­rate auf Seiten der europäischen Vereine sowie der zunehmenden Abhängigkeit von Investoren entgegenzusteuern. Um die Effektivität und Effizienz solcher Maßnahmen zu erhöhen, ist ein tief­gehendes Verständnis der institutionellen Rahmenbedingungen unabdingbar. Vor diesem Hinter­grund beschreibt und interpretiert der konzeptionelle Artikel das Verhältnis zwischen der UEFA und den Klubs mit Hilfe eines institutionenökonomischen Instrumentariums. Aus verfügungsrecht­licher Sicht (...) wird eine Verschiebung der Eigentums- und Machtverhältnisse zu Ungunsten der UEFA skizziert. Weiter zeigt sich, dass die Beziehung zwischen dem Dachverband und den Vereinen in vielen Aspekten einer klassischen Principal-Agent-Dyade entspricht. Die vorliegende Analyse baut diesbezüglich auf einer vorherigen Fallstudie von Schubert auf und entwickelt dessen Modell weiter. Die von der UEFA im Rahmen von Financial Fair Play verfolgte Strategie wird evaluiert, um daraus theoriebasiert handlungsleitende Gestaltungsempfehlungen zur Steigerung der Wirksamkeit des regulatorischen Eingriffs abzuleiten. (shrink)

This chapter argues for deregulation of the credit-rating market. Credit-rating agencies are supposed to contribute to the informational needs of investors trading bonds. They provide ratings of debt issued by corporations and governments, as well as of structured debt instruments (e.g. mortgage-backed securities). As many academics, regulators, and commentators have pointed out, the ratings of structured instruments turned out to be highly inaccurate, and, as a result, they have argued for tighter regulation of the industry. This chapter shows, however, that (...) the role of credit-rating agencies in achieving justice in finance is not as great as these commentators believe. It therefore argues instead for deregulation. Since the 1930s, lawgivers have unjustifiably elevated the rating agencies into official, legally binding sources of information concerning credit risk, thereby unjustifiably causing many institutional investors to outsource their epistemic responsibilities, that is, their responsibility to investigate credit risk themselves. (shrink)

Money markets are at the heart of financialized capitalism, as those markets that provide the funding liquidity needed for credit creation and leveraged trading. How have these markets evolved, grown, and become critical for larger financial flows? To answer this question, I distinguish an early period of financial globalization marked by regulatory arbitrage, offshoring, deregulation, and informal trading practices from a period of regime-consolidation marked by formal institutionalization. Concentrating on repo markets as the key funding sources for (...) market-based banking, I demonstrate that new institutional arrangements for these markets were initiated by private sector associations, but supported and authorized by public authorities. Bond trader groups codified new contractual arrangements and these were validated via reforms of bankruptcy codes and changes in central banks’ policy frameworks in the United States and European Union. Through these modifications and re-articulations in institutional conditions, transactions and large exposures on money markets became routine affairs—for shadow banking actors like money market funds as well as for commercial banks. The article concludes by discussing the continuity of regime-consolidation efforts after the transatlantic financial crisis and hypothesizes that they reveal “neo-patrimonial” features. (shrink)

This paper provides an exploratory comparative assessment of the institutional pressures influencing corporate social responsibility in a developed country, UK, vs. a developing country, Brazil, based on a survey of different actors. Information on sustainability concerns, organizational strategies and mechanisms of pressure was collected through interviews with environmental regulatory agencies, financial institutions, media and non-governmental organizations. Our results confirm that the more advanced awareness and CSR responsiveness in the UK is a consequence of a predominance of coercive and (...) normative forces on the organizational field. The institutional forces tend to build a Brazilian organizational field that is relational based and risk intensive. The findings lend support to the view that CSR responses are unlikely to be easily transformed into uniform standardized practices across the globe. This paper contributes to a collective understanding of the organizational field and a common template for CSR in the context of developed and developing countries. (shrink)

Informal institutions are found to shape the behaviors of economic organizations within the business world by creating localized social norms and moral commitments. However, the existing literature pays greater attention to the financial consequences of such institutions, and little is known about their environmental impacts, especially in the context of transition economies. By linking institutional theory with environmental strategy literature, in this study, we develop a theoretical framework and empirically test how social trust, one of the (...) dimensions of informal institutions, influences corporate environmental responsibility. Using a longitudinal data set of Chinese listed firms from 2006 to 2015, we find support that firms located in regions with a higher level of social trust engage in more environmental responsibility activities. We also show that this effect is more pronounced when local environmental protests are fewer and information transparency is worse. Our findings highlight the importance of social trust in environmental governance and provide evidence of how it serves as a substitute for formal environmental institutions in transition economies. (shrink)

This study examines the relationship between corporate social responsibility -related information and the value of financial analysts’ stock recommendations. The information environment in which analysts operate in is affected by CSR-related reports that companies voluntarily issue as well as information that becomes available through third-party analysis and rating institutions. We find an inverse relationship between the value of both upgrade and downgrade revisions and the supply of CSR-related information compiled by third-party institutions, suggesting that CSR-related data are (...) associated with a richer information environment that makes it more challenging for analysts to issue informative recommendations, thereby mitigating their contribution to the price discovery process. We further find that the value of analysts’ recommendation revisions is lower for companies that voluntarily issue CSR-related reports compared to those that do not make such disclosures and that the overall effect of CSR on the informativeness of analysts is stronger in the recent years. Our findings have implications for the evolution of CSR reporting as the incorporation of CSR-related information into market prices legitimizes the relevance of such reports. Furthermore, these findings contribute to our understanding of the role and value of information intermediaries in changing information environments. (shrink)

Micro Credit programs lend money to poor borrowers using innovative mechanisms such as group lending under joint liability while successfully accounting forthe presence of asymmetric information in underdeveloped financial markets. MC Programs have achieved what the conventional financial institutions and the government have not been able to: lend to the poor, recuperate loans and have a positive impact in poverty reduction. While loan recuperation is high (95% for our focus group ALSOL Chiapas), administrative costs also remain high. (...) Social Responsible Savers and Donors play a key role in providing continuous funding to Micro Credit Programs. (shrink)

Background: Financial conflict of interest in clinical research is an area of active debate. While data exist on the perspectives and roles of academic institutions, investigators, industry sponsors, and scientific journals, little is known about the perspectives of potential research participants.Methods: The authors surveyed potential research participants over the internet, using the Harris Interactive Chronic Illness Database. A potential research participant was defined by: self report of diagnosis by a health care professional and willingness to participate in clinical (...) trials. Email invitations were sent to 20 205 persons with coronary artery disease, breast cancer, or depression; a total of 6363 persons were screened; of these, 86% or 5478 met inclusion criteria and completed the survey. The outcome measures were respondents’ ratings on: importance of knowing conflict of interest information, whether its disclosure ought to be required, and its effect on willingness to participate—across seven widely discussed scenarios of financial conflicts of interest .Results: Majority responded that knowing conflict of interest information was “extremely” or “very” important; a larger majority felt financial conflicts of interest should be disclosed as part of informed consent . In all seven scenarios, a majority was still willing to participate but in some scenarios a sizable minority would be wary of participation. Respondents were more wary of individual than institutional conflicts of interest. Illness group and sociodemographic factors had modest effects and did not affect the main trends.Conclusions: The prevailing practice of non-disclosure of financial conflicts of interest in clinical research appears contrary to the values of potential research participants. (shrink)

In addition to facing the known competitors in the formal economy, entrepreneurs must also be concerned with rivalry emanating from the informal economy. The informal economy is characterized by actions outside the normal scope of commerce, such as unsanctioned payments and gift-giving, as means of influencing competition. Scholars and policy makers alike have an interest in mitigating the impacts of such informal activity in that it might present an obstacle for legitimate commerce. Received theory suggests that country (...) institutions can enable and constrain productive activity, and, in doing so, influence competitive obstacles in a country. Leveraging 13,670 responses from entrepreneurs distributed across 59 countries, we provide evidence that two particular types of enabling institutions, countries’ property rights regulations and cooperative actions, are useful for lowering the obstacles presented by informal activity. We also find evidence that two constraining institutions, economic and financial regulations lead to more obstacles presented by informal activity. We describe implications for entrepreneurs, policy makers, and future researchers stemming from these findings. (shrink)

Purpose This paper aims to seek to ascertain the corporate social responsibility information needs of customers of microfinance institutions. It also ascertains their media preferences for CSR disclosure. Design/methodology/approach The study adapted Wilson’s concept of information needs as the conceptual basis of this study. Case study research design was used. The respondents consisted of customers of MFIs in Ghana. Semi-structured interview was used to collect the data. Data were analysed using thematic analysis technique. Findings The study found that the (...) CSR information needs of MFIs’ customers relate to moral disclosure, business survival disclosure, financial and business terms and conditions disclosure, donations disclosure and capacity building and training disclosure. The study also found that family and friends are the most reliable sources of CSR information for MFIs’ customers. Originality/value There is a great deal of literature available on CSR disclosure. However, limited studies have investigated the information needs of customers regarding CSR disclosure. Again, CSR disclosure in the Microfinance sector has received limited attention in the existing literature. This study expanded the existing literature by investigating the CSR information needs of MFIs’ customers. (shrink)

BackgroundInformed consent forms are intended to facilitate research enrollment decisions. However, the technical language in institutional templates can be unfamiliar and confusing for decision-makers. Standardized language describing financial implications of participation, namely compensation for injury and costs of care associated with participating, can be complex and could be a deterrent for potential participants. This standardized language may also be misleading in the context of comparative effectiveness trials of standard care interventions, in which costs and risk of injury associated with (...) participating may not differ from regular medical care. In addition, the revised U.S. Common Rule contains a new requirement to present key information upfront; the impact of how this requirement is operationalized on comprehension and likelihood of enrollment for a given study is unknown.MethodsTwo online surveys assessed the impact of (1) changes to compensation for injury language (standard vs. tailored language form) and (2) changes to the key information page (using the tailored compensation language form with standard key information vs. modified key information vs. modified key information plus financial information) on both likelihood of enrollment in and understanding of a hypothetical comparative effectiveness trial.ResultsLikelihood of enrolling was not observed to be different between the standard and tailored language forms in Study 1 (73 vs. 75%; p = 0.6); however, the tailored language group had a higher frequency of understanding the compensation for injury process specific to the trial (25 vs. 51%; p < 0.0001). Modifications to the key information sheet in Study 2 did not affect likelihood of enrolling (88 vs. 85 vs. 85%; p = 0.6); however, understanding of randomization differed by form (44 vs. 59 vs. 46%; p = 0.002).ConclusionsThese findings suggest that refining consent forms to clarify key information and tailoring compensation for injury language to the nature of the study, especially in the context of comparative effectiveness trials, may help to improve study comprehension but may not impact enrollment. (shrink)

The enduring failure of financial institutions to identify and deal with risk events continues to have serious repercussions, whether in the form of small but significant losses or major and potentially far-reaching scandals. Using a mixed-methods approach that combines an innovative version of the classic dictator game to inform prosocial tendencies with the survey-based Theory of Planned Behaviour, we examine the risk-escalation behaviour of individuals within a large financial institution. We discover evidence of purely selfish behaviour that (...) explains the lack significance in pressure to adhere to the Subjective Norms of colleagues around intention to report risks. A finding that has potentially important implications for efforts to instil a high-error management climate and incentivise risk reporting within organisations where risk, if ignored or unchecked, could ultimately have consequences that extend far beyond the institutions themselves. (shrink)

Financial accountants falsify financial statements by means of financial techniques such as financial practices and financial standards, and when compared with conventional financial data, it is found that the falsified financial data often lack correlation or even contradict each other in terms of financial data indicators. At the same time, there are also inherent differences in reporting patterns from conventional financial data, but these differences are difficult to test manually. In this (...) paper, the fuzzy C-means clustering method is used to amplify these differences and thus identify false financial statements. In the proposed algorithm, firstly, the normalization constraint of the FCM clustering algorithm on the sum of affiliation of individual samples is relaxed to the constraint on the sum of affiliation of all samples, thus reducing the sensitivity of the algorithm to noise and isolated points; secondly, a new affiliation correction method is proposed to address the problem that the difference in affiliation is too large after the relaxation of the constraint. In the discussion of this paper, most of the information comes from the annual reports of companies, administrative penalty decisions of the Securities Regulatory Commission, and some information comes from research reports made by securities institutions, which are limited sources of information. The proposed method can correct the affiliation to a reasonable range, effectively avoiding the problem that some samples have too much affiliation and become a class of their own and also avoiding the problem that it is difficult to choose the termination threshold of the algorithm iteration due to too little affiliation, and can ensure that the constraint on the sum of affiliation of all samples is always satisfied during the iteration of the algorithm. The method has the characteristics of high recognition accuracy and has the significance of theoretical method innovation. (shrink)

With the emergence of service provisioning environments and new networking capabilities, antagonistic businesses have been able to collaborate securely by sharing information in order to have a beneficial result for all. This collaboration has sometimes been imposed by state legislation and sometimes been desirable by the firms themselves so as to resolve frequently occurring abnormalities. In any case, as information exchange takes place between antagonistic firms, security and privacy issues arise. In the context of this paper, a collaborative environment has (...) been analyzed for enterprises that set out in the banking sector. A Grid-based Anti-Money Laundering (AML) system has been developed in an effort to take advantage of the Grid infrastructure, supporting the secure and trustful exchange of information between financial institutions and ensuring the confidentiality of the data transferred and the authentication of the users to whom they are available. Special emphasis is put on security mechanisms for supporting identity and privacy management as well as in Service Level Agreements (SLA) enforcement for enabling a trust enforcement platform in a collaboration business model. (shrink)

The global financial crisis that began in 2007 concentrated attention on the morality of banking and financial activities. Just as mainstream businesses became increasingly defined by their financial performance, banks, it seemed, got themselves - and everyone else - into trouble through an over-emphasis on themselves as commercial enterprises that need pay little attention to traditional banking virtues or ethics. While the GFC had many causes, criticism was legitimately levelled at banks over the ethics of mortgage creation, (...) excessive securitisation, executive remuneration, and high-pressure customer sales tactics, amongst other things. These criticisms mirror those that have been levelled at the business more generally, particular in the last decade, although the backdrop provided by the GFC is more dramatic, and the outcomes of supposed wrongdoing more severe. This book focuses on business ethics after the GFC; not on the crisis itself, but how we should respond to it. The GFC has focused minds on the proper role of ethics in the understanding and conduct of business activity, but it is essential to look beyond the crisis to address the deeper challenges that it highlights. The aim of this volume is to present examples of the latest philosophically-informed thinking across a range of ethical issues that relate to business activity, using the banks and the GFC - the consequences of which continue to reverberate - as a point of departure. The book will be of great value to researchers, academics, practitioners, and students interested in business, ethics in general, and business ethics in particular. (shrink)

This study explores the relevance of corporate social responsibility (CSR) as an element of the corporate identity of Spanish financial institutions. Specifically, it aims to analyze the CSR actions developed by financial entities through the analysis of all the available information disclosed in their websites. A content analysis applied to 82 banking institutions, followed by different quantitative analyses, reveals the multidimensionality of CSR. Findings show that, while the number of entities institutionalizing CSR values as core elements (...) of their identities is still reduced, most organizations disclose CSR information to construct communicated identities and legitimate behaviours. Besides, these dimensions are classified depending on the stakeholder the action is aimed to, and that entities favour the generation of distinctive identities through the implementation and communication of more visible CSR actions like those involving their customers or the community. In any case, results indicate that organizations with certain characteristics are more likely to construct distinctive identities through CSR activities and to establish ethical and social values within their corporate statements and cultures. (shrink)

The main aim of this study was to empirically analyze whether Institutional Quality moderates the relationship between corporate governance and stock liquidity through the light of agency and information asymmetry theory. To the best of our knowledge, this is the first finance study. The sample consists of 230 non-financial firms listed on the Pakistan stock exchange during the period of 2009–2019. We used an instrumental variable approach and our new Institutional Quality index composed of world governance indicators and a (...) corporate governance index, developed via principal component analysis, to demonstrate a relationship between corporate governance and stock liquidity and check the moderating role of Institutional Quality by following the resources complementary phenomenon. Our results show a significant, positive relationship between the corporate governance index and stock liquidity, suggesting that well-governed firms have high liquidity. The results show that the Institutional Quality index has a positive moderating impact on the relationship between corporate governance and stock liquidity, suggesting that corporate governance in Pakistan is weak. Our results are robust to a series of endogeneity checks using alternative proxies of stock liquidity. (shrink)

The Sarbanes–Oxley Act of 2002 requires company executives to certify financial statements and internal controls as a means of reducing fraud. Many companies have operationalized this by instituting a sub-certification process and requiring lower-level managers to sign certification statements. These lower-level organizational members are often the individuals who are aware of fraud and are in the best position to provide information on the fraudulent act. However, the sub-certification process may have the effect of reducing employees’ intentions to report wrongdoing. (...) We suggest that subordinates with knowledge of a superior who committed a fraudulent act and certified that there is no fraud will feel less personal responsibility to report the act, thus, decreasing reporting intentions. Additionally, we suggest that if the fraud is discovered subsequent to the reports being filed with the Securities and Exchange Commission, employees will perceive lower management responsiveness to investigate the fraud, which will reduce intentions to report. Using an experimental approach, we manipulate two between-participant variables: the presence or absence of sub-certification by the transgressor and the timing of fraud discovery, either before or after the reports have been filed with the SEC. We find that when sub-certification is present, perceived personal responsibility and intentions to report were diminished compared to when sub-certification is absent. Timing of the discovery of the fraudulent act did not influence perceived management responsiveness or reporting intentions. Supplemental analysis shows that personal responsibility partially mediates the relationship between sub-certification and reporting intentions. Our findings suggest that audit committees and senior executives may want to carefully consider the costs and benefits of the sub-certification process. (shrink)

The present paper proposes a theoretical model of institutional quality of a higher education institution (HEI) which, in addition to the internal dimensions of quality, incorporates also the external dimension, i.e. the outcomes dimension. This dimension has been neglected by the quality standards and models examined in our paper. Furthermore, the standards and models analyzed consider stakeholders as one of the quality factors of a HEI. The stakeholders’ perspective is seen as a lens through which stakeholders define, control and assess (...) the quality of a HEI. The proposed model therefore gives stakeholders greater significance compared to the dimensions of institutional quality of a HEI. The model has been validated from the employers’ perspective. On the basis of 339 completed questionnaires or a 39.74 % response rate we concluded that outcomes constitute the most important dimension of institutional quality of a HEI from the perspective of employers in Slovenia. The outcomes dimension is followed, in descending order, by the non-financial resources and inputs, sustainable development, value chain, and, finally, the financial resources and inputs dimensions. The results of the study have shown that of the 44 quality factors of a HEI the following data are of key importance to employers: information on the participation of students in practical training, achievements of graduates at the workplace, implementation of a HEI’s research achievements in practice, graduate employability, and a HEI’s responsiveness to the demands and changes in the environment. (shrink)

Resisting Corporate Corruption teaches business ethics in a manner very different from the philosophical and legal frameworks that dominate graduate schools. The book offers twenty-eight case studies and nine essays that cover a full range of business practice, controls and ethics issues. The essays discuss the nature of sound financial controls, root causes of the Financial Crisis, and the evolving nature of whistleblower protections. The cases are framed to instruct students in early identification of ethics problems and how (...) to work such issues within corporate organizations. They also provide would-be whistleblowers with instruction on the challenges they’d face, plus information on the legal protections, and outside supports available should they embark on that course. Some of the cases illustrate how ‘The Young are the Most Vulnerable,’ i.e. short service employees are most at risk of being sacrificed by an unethical firm. Other cases show the ethical dilemmas facing well-known CEOs and the alternatives they can employ to better combine ethical conduct and sound business strategy. Through these case studies, students should emerge with a practical toolkit that better enables them to follow their moral compass. Finally, the cases provide an in depth look at how a corporation becomes progressively corrupted (Enron), how the Financial Crisis was rooted in ethical decay at institutions as diverse as Countrywide, Goldman Sacks, Citigroup, Fannie Mae and Moody’s, and at the ethical challenges that persist in the post-Crisis, post-Dodd-Frank environment. (shrink)

This article has already been published in Techné : Research in Philosophy and Technology, 19:3, pp. 358–380.: This article explores the relevance of Georg Simmel's phenomenology of money and interpretation of modernity for understanding and evaluating contemporary financial information and communication technologies. It reads Simmel as a philosopher of technology and phenomenologist whose view of money as a medium, a “pure” tool, and a social institution can - Sociologie – Nouvel article.

Using PitchBook’s private equity database of 4548 PE funds from 42 countries for the 2000 to 2012 period, we find that higher reporting frequency is associated with lower information asymmetry in performance reports from general partners to limited partners. We also find that endowments are systematically associated with less reported unrealized returns as a percentage of total returns generated from GPs. Moreover, endowments receive more performance reports from their PE funds, implying more stringent governance. These findings persist after controlling for (...) various institutional and GP characteristics and are robust to several adjustments for endogeneity concerns. This study also contributes to the finance, accounting, and business ethics literature on financial reporting quality. (shrink)

The literature on Base of the Pyramid strategies emphasizes that creating social value requires collaborative, multi-stakeholder business approaches. However, there is limited understanding of how businesses can successfully coordinate such value creation processes in the developing economies that face significant institutional voids. This study adopts a business model perspective for analyzing social value creation processes that span organizational boundaries. We introduce a novel, theoretically grounded business model framework that helps conceptualize social value by locating the various loci of value creation, (...) and the stakeholders that partake in creating and capturing this value. We subsequently analyze the mechanisms of social value creation in M-Pesa, a renowned boundary-spanning mobile money system that has advanced financial inclusion among tens of millions of users in Kenya. The results show that information and communications technology can help advance social value creation by reducing the cost of coordinating boundary-spanning business models that integrate diverse societal stakeholders. The results further point to uneven distributional outcomes in self-governing social value creation strategies where the focal firm plays a coordinating role. (shrink)

Reports of research fraud have raised concerns about research integrity similar to concerns raised about financial accounting fraud. We propose a departure from self-regulation in that researchers adopt the financial accounting approach in establishing trust through an external validation process, in addition to the reporting entities and the regulatory agencies. The general conceptual framework for reviewing financial reports, utilizes external auditors who are certified and objective in using established standards to provide an opinion on the financial (...) reports. These standards have become both broader in scope and increasingly specific as to what information is reported and the methodologies to be employed. We believe that the financial reporting overhaul encompassed in the US Sarbanes–Oxley Act of 2002, which aims at preventing accounting fraud, can be applied to scientific research in 4 ways. First, Sarbanes–Oxley requires corporations to have a complete set of internal accounting controls. Research organizations should use appropriate sampling techniques and audit research projects for conformity with the initial research protocols. Second, corporations are required to have the chief financial officer certify the accuracy of their financial statements. In a similar way, each research organization should have their vice-president of research (or equivalent) certify the research integrity of their research activities. In contrast, the primary responsibility of the existing Research Integrity Officers is to handle allegations of research misconduct, an after-the-fact activity. Third, generally accepted auditing standards specify the appropriate procedures for external review of a corporation’s financial statements. For similar reasons, the research review process would also require corresponding external auditing standards. Finally, these new requirements would be implemented in stages, with the largest 14 research organizations that receive 25% of the total National Institutes of Health funding, adopting these research oversight enhancements first. (shrink)

The activism of institutional investors tends more and more toward the supervision and control of the behavior of the managers of big companies. In this article, we present a model based on the creation of an activism index that lets us evaluate such activism's effect on the sensitivity of the investment policies of a company in the face of financial variables and market variables. To test our assertions, we analyze firm-level data for United Kingdom, Germany, France, Denmark, and Spain (...) during the period 1995-2004. Our results point to a significant reduction in the sensitivity of company investment decisions in the face of these variables, especially relative to intangible capital, as a result of the neutralizing effect of activism on the high agency costs of free cash flow and on the information asymmetries of the market. (shrink)

The activism of institutional investors tends more and more toward the supervision and control of the behavior of the managers of big companies. In this article, we present a model based on the creation of an activism index that lets us evaluate such activism's effect on the sensitivity of the investment policies of a company in the face of financial variables and market variables . To test our assertions, we analyze firm-level data for United Kingdom , Germany, France, Denmark, (...) and Spain during the period 1995-2004. Our results point to a significant reduction in the sensitivity of company investment decisions in the face of these variables, especially relative to intangible capital, as a result of the neutralizing effect of activism on the high agency costs of free cash flow and on the information asymmetries of the market. (shrink)

The activism of institutional investors tends more and more toward the supervision and control of the behavior of the managers of big companies. In this article, we present a model based on the creation of an activism index that lets us evaluate such activism’s effect on the sensitivity of the investment policies of a company in the face of financial variables (such as cash flow and liquidity ratio) and market variables (ownership concentration and value creation index). To test our (...) assertions, we analyze firm-level data for United Kingdom (U.K.), Germany, France, Denmark, and Spain during the period 1995–2004. Our results point to a significant reduction in the sensitivity of company investment decisions in the face of these variables, especially relative to intangible capital, as a result of the neutralizing effect of activism on the high agency costs of free cash flow and on the information asymmetries of the market. (shrink)

The study contributes to building an understanding of the impact of political forces on the information environment of listed firms in a developing economy. Specifically, it investigates the tensions between politico-institutional factors and accounting regulation on the prolonged and incomplete implementation of the International Financial Reporting Standards in Bangladesh from 1998 to 2010. Two phases of interviews were conducted in 2010–2011 and IFRS-related enforcement documents from 1998 to 2010 were evaluated. The study contributes that IFRSs are being diffused to (...) developing countries like Bangladesh, but they invariably interact with local institutions, with variable outcomes. Coercive, normative and mimetic isomorphisms are low in Bangladesh. Notably, political forces have been undermining mimetic isomorphism because of the high level of government intervention and the high level of political lobbying. Political institutional pressures stand in the way of mimetic isomorphism and constitute negative forces that add further tension to accounting regulation in Bangladesh. Regarding the low level of normative isomorphism, there is evidence of a ‘blame culture’, with state institutions and professional accountancy institutions in the country blaming each other for the poor progress in IFRS implementation. Although the study focuses on Bangladesh, its results have implications for international policy makers, as well as the governments and regulators of other developing economies facing similar challenges in implementing IFRS. (shrink)

In this book, Seumas Miller examines the moral foundations of contemporary social institutions. Offering an original general theory of social institutions, he posits that all social institutions exist to realize various collective ends, indeed, to produce collective goods. He analyses key concepts such as collective responsibility and institutional corruption. Miller also provides distinctive special theories of particular institutions, including governments, welfare agencies, universities, police organizations, business corporations, and communications and information technology entities. These theories are philosophical (...) and, thus, foundational and synoptic in character. They are normative accounts of a sampling of contemporary social institutions, not descriptive accounts of all social institutions, both past and present. Miller also addresses various ethical challenges confronting contemporary institutional designers and policymakers, including the renovation of the international financial system, the 'dumbing down' of the media, the challenge of world poverty, and human rights infringements by security agencies combating global terrorism. (shrink)

Owing to the adverse impact of the COVID-19 pandemic on world economies, it is expected that information flows between commodities and uncertainties have been transformed. Accordingly, the resulting twisted risk among commodities and related uncertainties is presumed to rise during stressed market conditions. Therefore, investors feel pressured to find safe haven investments during the pandemic. For this reason, we model a mixture of asymmetric and non-linear bi-directional causality between global commodities and uncertainties at different frequencies through the information flow theory. (...) Consequently, we utilise the complete ensemble empirical mode decomposition with adaptive noise and the Rényi effective transfer entropy techniques to establish the dynamic flow of information. The intrinsic mode functions from the CEEMDAN are carefully extracted into multi-frequencies through cluster analysis to reconstruct the series into high, medium, and low frequencies in addition to the residue. We utilise daily data from December 31st, 2019, to March 31st, 2021, to provide insights into the COVID-19 pandemic. The correlation coefficients and variances demonstrate that the high frequency which measures the short-term dynamics is the dominant frequency, suggesting short-lived market fluctuations relative to real economic growth for institutional investors. Moreover, outcomes from the multi-frequency entropy indicate a negative bi-directional causality of information flow between global commodities and uncertainties, especially in the long term. Generally, the findings present pertinent inferences for portfolio diversification, policy decisions, and risk management schemes for global commodities and markets volatilities. We, therefore, advocate that market volatilities act as effective hedges for global commodities, and they clearly act as balancing assets rather than substitutes in the long-term dynamics of the COVID-19 pandemic. Investors who delayed in investing within financial markets of commodities and market volatilities are likely to minimise their portfolio risks. (shrink)

We examine the equity valuation effect of press releases of upgrades or downgrades reflected in the Covalence Ethical Quote, an index ranking the ethical performance of multinational firms. The index is updated quarterly and is comprehensive enough to include 45 criteria reflecting working conditions, impact of product, impact of production, and company institutional impact. Thus, it captures many dimensions of firms’ ethical performance that are not accounted for in previous research. Our research encompasses a joint test of the value relevance (...) of the index itself and the impact of ethical reputation on a firm’s value. We find first a significant causal relationship between stock market reactions and changes in the CEQ. Specifically, disclosures of positive changes in firm ethical performance cause increases in firm value. Second, cross-sectional analysis indicates a positive association between changes in firm ethical performance and both its financial performance and its financial reporting quality. Collectively, these results suggest that the CEQ conveys information that is useful to investors. Further, corporate measures taken to increase ethical performance are associated with positive benefits to shareholders. Finally, investors have concluded that good news about their firms’ efforts to be ethical is worth the cost. (shrink)

The essence of the security complex is revealed. Approaches to understanding the essence of information security are determined, in particular, as a state of security, as a type of public information legal relations, the direction of information relations within the limits of information legislation, the state of information (information environment of society, information development). The informational component of national security is considered. The institutional landscape of information security is described, which includes supranational international bodies and institutions and transnational corporations, (...) states and their governments, business entities and financial and industrial groups, political parties and civil society organizations, religious organizations, fundamentalist and terrorist groups, individual politicians and public figures, journalists and publicists, bloggers and other persons who collect, process, perceive, store, transform and distribute information through any of the available communication channels. The directions of ensuring information security in modern Ukraine are characterized. The role of information security in ensuring the integrity of the national information space of Ukraine is revealed. It has been proven that with the help of modern information security technologies, it becomes possible to minimize the impact of various threats and risks on the functioning of the information space at the global / regional, national / local levels. (shrink)

As part of the Securities and Exchange Commission’s revision of Regulation S–K, which lays out reporting requirements for publicly-listed companies, many investors proposed the mandatory disclosure of sustainability information in the form of environmental, social and governance data. However, progress is contingent on collecting evidence regarding which sustainability disclosures are financially material. To inform this issue, we examine materiality standards developed by the Sustainability Accounting Standards Board. Firms voluntarily disclosing more SASB-identified sustainability information exhibit greater price informativeness, while the disclosure (...) of non-SASB information does not relate to informativeness. The results are robust to a changes analysis and a difference-in-differences analysis that exploits the staggered release of SASB standards across different industries over time. We also document stronger results for firms with higher exposure to sustainability issues, poorer sustainability ratings, greater institutional and socially responsible investment fund ownership, and coverage from analysts with lower portfolio complexity. (shrink)

Objectives: To determine whether authors of scientific publications in molecular biology declare patents and other potential financial interests.Design: Survey of a 6-month sample of papers related to molecular biology in Nature.Methods: The esp@cenet worldwide patent search engine was used to search for patents applied for by the authors of scientific papers in Nature that were related to molecular biology and genetics, between January and June 2005.Results: Of the 79 papers considered, four had declared that certain authors had competing (...) class='Hi'>financial interests. Seven papers in which no financial interests were declared had authors with patent applications that were based on the research in the paper or were closely related to it. Another paper had two authors with connections to biotechnology companies that were not disclosed.Conclusion: Two thirds of the papers in which authors had patent applications or company affiliations that might be considered to be competing financial interests did not disclose them. Failure to disclose such information may have negative implications on the perception of science in society and on its quality if the possible bias is hidden. Journals should make greater efforts to ensure full disclosure, and scientific institutions should consider failure to disclose financial interests as an example of scientific malpractice. Establishing a register of interests for scientists is one way to increase transparency and openness. (shrink)

Research participants' views about investigator financial interests were explored. Reactions ranged from concern to acceptance, indifference, and even encouragement. Although most wanted such information, some said it did not matter, was private, or was burdensome, and other factors were more important to research decisions. Very few said it would affect their research decisions, and many assumed that institutions managed potential conflicts of interest. Although disclosure of investigator financial interest information to research participants is often recommended, its usefulness (...) is limited, especially when participation is desired because of illness. (shrink)

Bank customers are not financial experts, and yet they make high-stakes decisions that can substantively affect personal wealth. Sooner or later, every individual has to take relevant investment decisions. Using data collected from financial advisors, bank customers and university students in Italy, this paper aims to reveal new insights about the decision processes of average non-expert investors: their investment goals, the information sets they consider, and the factors that ultimately influence decisions about investment products. Using four portfolio choice (...) tasks based on data collected directly from financial advisors and their clients, we find that most subjects used a limited set of information, ignoring factors that conventional economic models usually assume drive investor behavior. Furthermore, we suggest that non-compensatory decision-tree models, which make no trade-offs among investment features, are parsimonious descriptions of investor behavior useful for improving the organization of financial institutions and in policy contexts alike. (shrink)

In the past, for universities, the suggestion that they rather than other, commercial, actors should seek to control and profit from the results of research was hardly entertained at all, not least as in many cases these institutions jealously guarded their relative unconnectedness from the market.However, two political economic shifts have transformed this situation and the previous benign neglect of intellectual property in universities is unlikely to continue. On the commercial side, the increased share of value-added in many products (...) has focussed corporate managers on the issue of the ownership and exploitation of knowledge and information.On the other side, universities have themselves have been suffering varying, and in some cases quite extensive, pressure as regards their publicly funded budgets. Thus, in many developed and developing countries, encouraged by their own governments, and in the case of developing countries by international financial institutions, many universities have started to examine new ways of capitalising on their activities through market activities. This has led to many universities finding themselves torn between a norm of scientific community and the requirements to utilise their research-related resources as sources of income.This article explores this issues and concludes that the university’s most obvious competitive advantage is in the provision of publicly available knowledge and research; to become too like the corporate sector is to invite conversion into commercial actors. We already have quite enough commercial actors in the global information society; our attention must be focussed on maintaining and even expanding the realm of the public research institution by building on the many centuries of success universities have enjoyed in providing social goods. (shrink)

This article explores the relevance of Georg Simmel’s phenomenology of money and interpretation of modernity for understanding and evaluating contemporary financial information and communication technologies (ICTs). It reads Simmel as a philosopher of technology and phenomenologist whose view of money as a medium, a “pure” tool, and a social institution can help us to think about contemporary financial media and technologies. The analysis focuses on the social-spatial implications of financial ICTs. It also makes links to media theory, (...) in particular remediation theory and Marshall McLuhan, and refers to work in anthropology and geography of money to nuance the story of the progressive dematerialization and delocalization of modern life. The conclusion highlights Simmel’s continuing relevance for thinking about the relation between technologies and social change, and explores alternative social-financial media and institutions. (shrink)

As part of a larger research study, we present model language for disclosing financial interests in clinical research to potential research participants, and we describe the empirical basis and theoretical assumptions used in developing the language. The empirical process for creating appropriate disclosure language resulted in a generic disclosure statement for cases in which no risk to participants’ welfare or the scientific integrity of the research is expected, and nine more specific disclosure statements for cases in which some risk (...) is expected. The disclosure statements are not meant to be canonical, but were instead designed to reflect the typical situations in which disclosure of financial interest might be considered by an institutional review board or conflict of interest committee. Individual institutions could modify key phrases to suit their purposes, and others could use the language in future empirical work on informed consent to better refine the options for disclosing financial interests in clinical research. (shrink)

In this chapter, my main aim is to explore some of the central moral critiques of international financial institutions as well as proposals to overcome the moral problems that they face.

Today, the risk management of budget challenges throughout the budget process is greater than ever. The process of change has been driven by new information and communication technologies, resulting in e-government. The purpose of this scientific paper is to see whether budgetary challenges have an effect on the performance of e-government in complex financial systems based on factors F1, F2, F3, F4, and F5: lack of information, lack of cooperation, lack of resources and reduction of focus, lack of budget (...) experts and financial stability, and shortcomings and inconsistencies during the budget process. Therefore, this study aims to advance the understanding of how to manage risks from budgetary challenges by focusing on a novel approach to improve e-government performance in complex financial systems. Empirical research was based on three key issues: an approach to e-government, analyzing which variables need more attention to risk, and learning how to meet budgetary challenges to improve performance during governance. For this study, the data were conducted by Kosovo’s public institutions, more specifically at the central level and at the local level. A total of 38 questionnaires were analyzed and divided into three sessions, which were analyzed through three analyses, such as factor analysis, data reliability analysis, and multiple regression analysis, using SPSS version 23.0 for Windows. The research was conducted over the years 2017, 2018, 2019, and 2020, while the analysis involved several processes, where some of the factors were removed in order to make the model acceptable. In this case, 21 variables were tested and divided into 5 factors. The results showed that special attention should be paid to these factors to reduce budgetary challenges and increase the performance of e-government in complex financial systems, such as lack of resources, increasing the focus on risk management even after the transfer of funds from the ministry to the municipality, the selection of programs based on priorities and not on the basis of wishes and policies, having political stability, rule of law, and more control, and having regulations and guidelines from the practices of developed countries as well as taking into account the opinions of budget experts. The implications of this paper have to do with only a considerable number of variables, which were taken in the study as well as only in the municipalities of Kosovo. In this case, for other analyses by other researchers, other variables can be analyzed in other countries by making comparisons. (shrink)

Today, for cultural institutions, in particular, for libraries, the issue of evaluating the effectiveness of their activities is particularly relevant. There is still no single assessment methodology that takes into account the interests of all stakeholders: outside experts, library managers and staff, investors and sponsors of library activities. The purpose of the study is to develop an integrated methodology for evaluating the effectiveness of state cultural institutions, taking into account the needs of all potential users. The scientific novelty (...) lies in the development, based on the results of an empirical study, of an indicator for measuring the effectiveness of the activities of state cultural institutions, as well as an integrated methodology for evaluating the effectiveness of the library, taking into account the economic and non-economic interest of the activity and providing a comprehensive application of financial and managerial, information and organizational, control and analytical measures, which together contribute to improving the effectiveness of the activity. As a result, the author proposed a unified methodology for evaluating the effectiveness of state cultural institutions on the example of the Kostroma Regional Universal Scientific Library. (shrink)

Social enterprises in the microfinance industry need to adhere to both financial and social demands. Critics argue that there is a mission drift away from the social mission, and this has motivated the introduction of social rating agencies to strengthen the business ethics of microfinance institutions. Using a global dataset of 204 socially rated MFIs from 58 countries, we assess the factors that drive the social performance ratings of MFIs. Overall our results show that social ratings of MFIs (...) are significantly related to financial performance, greater outreach especially in rural areas, well-defined social objectives, staff commitment, service quality and an enhanced customer service. We observe that various rating agencies attach different importance to each of the social indicators. The public policy implication is that social rating agencies need to become more transparent, to reduce the information asymmetries between heterogenous socially motivated investors and the focal MFI. (shrink)

This article addresses the service of financial companies to society from the perspective of the Catholic Social Teaching (hereinafter CST), specifically regarding conflicts of interest between banks and their customers. The article begins with a case based on interviews with professionals in the financial sector, which provides the context for the CST’s contribution. The analysis of the aforementioned conflicts points to an apparent disconnect between service to society and service to customers. Thus, the bank would set aside the (...) customer’s interests in exchange for a better service to society through good results. This article presents the CST’s normative framework to analyze this matter through some of the CST’s principles: the centrality of the person, the respect for her dignity, and the orientation to the common good. These principles and the CST’s ethical concept of service provide guidance in assessing these conflicts of interest. From an ethical point of view and according to CST, there cannot be a true service to society if the dignity of the client is not respected. It is necessary to review the organization’s incentive policy and level of awareness about the importance of customer service. We end with recommendations related to conflicts of interest with clients. (shrink)