The past decade has provided enough corporate scandals, financial frauds, and reckless risk management in investment services to last most people a lifetime. Many of the behaviors involved misstatements of financial performance, failure to disclose relevant information to people with a right to have such information, and insider trading. The underlying responsibility for the occurrence of such events lies primarily with the perpetrators of those events. Some degree of responsibility, however, also has been attributed to failures of corporate governance, as well as to the complicity or the ineptitude of the accounting firms that certified the financial statements of corporations. Encompassing all of the objectionable behaviors and all of the parties sharing responsibility for these behaviors, however, is a widespread breakdown of the adherence to ethical principles.
The findings of a review of the unacceptable practices and behaviors, together with consideration of shared responsibility for those behaviors are presented in this paper. The review was performed through the lens of ethical behavior in the conduct of business, financial, and investment activities. The use of the phrase, ethical behavior in the conduct of business, financial, and investment activities, may lead some readers to assume that ethics and business ethics are two different things, i.e., that behavior that would otherwise would be unacceptable is acceptable in a business environment. Such an interpretation falls under the classification of "ethical relativism" (DeGeorge, 2005, p. 41).
An important criticism of ethnical relativism is that no firm ethical guidelines apply to all situations. Rather, behaviors are evaluated within the situational framework and through the lens of the evaluators (Wright, 2008). This stance led W. P. Lewis (1985) to the conclusion that attempting to define business ethics is a task that is comparable to attemp...