Investment Ethics

ISBN-13: 9780470434536 / Angielski / Miękka / 2010 / 304 str.

Sarah Peck;¬Abar;¬Abar

Opis

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.

Spis treści

PREFACE PART I– Ethical Behavior CHAPTER 1– Introduction: The Case for Investment Ethics  Introduction–The Investment Industry– A Legacy of Scandals 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 Agencies CHAPTER 2– Fiduciary Duty of Investment Professionals– The Ethical Treatment of the Client  Introduction– What is A Fiduciary?  Agency Versus Fiduciary Relationships  The Role of Laws, Regulations, and Professional Standards  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 Ethics CHAPTER 3 – Ethical Reporting of Investment Performance  Introduction to Ethics in Reporting Performance  Calculating Return: Predicting Future Performance or Measuring 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 & Return Performance  Other Ways to Distort Historical Performance  Reporting Performance to Attract New Clients– Cherry Picking Accounts  Hidden Risks: Leverage, Short–Selling, Liquidity  Special Considerations with Valuing Securities that Don t Trade  Conclusion– The Crystal Ball  Appendix– Review of Investments Basics CHAPTER 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 Stale Prices  Market Manipulation  Conclusion– Information And Fairness CHAPTER 5–Analyst Integrity  Introduction– Analysts and Their Ethical Obligations  Investment Recommendations– Pickers  Forecasters  Buy Side and Sell Side Analysts– Who pays for the research?  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 Analysis CHAPTER 6–Investing in Companies with Ethical Accounting Practices  Introduction– Reported Accounting Performance– Healthy Cynicism  The Source of Accounting Distortions–Accruals  Discretionary and Non–Discretionary Accruals  Managers Incentives to Manage Earnings   Cookie Jar Reserves and Big Baths  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 Governance Practices  Introduction–Corporate Governance and its Importance to Ethical Analysts  Countrywide Financial Corporation– A Case of Weak Corporate Governance 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 Potential Conflicts  Executive Compensation– Structure and Incentives  Option Grant Abuses  Golden Parachutes, Golden Hand–cuffs, Golden Coffins  Horizon Problems And The Firm s Long–Run Profitability  Shareholders Rights and The Takeover Market  Conclusion– Shareholder s Rights and Conflicts  Appendix– Review of Stock Options CHAPTER 8–Socially Responsible Investing  Introduction– Directing Financial Capital to Benefit Society  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, and Foundations  Community Investing  and Micro Finance Lending  Islamic Finance  Conclusion– Obstacles To Doing Well While Doing Good CHAPTER 9–Cases  Case #1– UBS and Morgan Stanley– An Elaborate Insider Trading Scheme  Case #2– Emulex and Mark Jakob– Market Manipulation with False Information  Case #3– Fidelity Traders and Gifts from Jefferies– Soliciting Brokerage from Traders  Case #4– Heartland Advisors and Bond Funds– Misrepresentation of Bond Values  Case #5– A.G. Edwards and Variable Annuities– An Inappropriate Investment  Case #6– Charles Hintz and Sanford Bernstein– Analysts Conflicts with Personal Holdings  Case #7– Nicholas Cosmo and Agape World Inc .– A Ponzi Scheme  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 Market Manipulation?  Case # 11– Qwest Communications International – Accounting Fraud and Overstated Revenues  Case #12– Refco– Misrepresentation and Hidden Debt  Case #13– Salomon Brothers and the Treasury Market– Cornering the 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– Bonuses Paid to Merrill Employees –Excessive Compensation?  Case #17– Canary Capital Partners LLC– Mutual Fund Abuses  Case #18– Jérôme Kerviel and Société Générale–  Rogue Trader  Case #19– WorldCom– Capitalizing Operating Expenses, an Unethical  Accounting Practice  Case #20– The Squawk Box– Front Running  Case #21– Morgan Stanley– Brokerage Commissions and Brokerage Abuses  Case #22– Brian Hunter and Amaranth Advisors–Market manipulation of Natural Gas?  Case #23– The Bayou Group– False Reporting  Case #24– Morgan Stanley– Analyst s Coverage and Investment Banking Business  Case #25– Bernie Madoff– The Largest Ponzi Scheme in History?  Case #26 – Enron– A Case of Extreme Hubris  Case #27– UnitedHealth– Back Dating Stock Options  Case #28– First Cash Financial Services– Pay Day Loans and Return  Case #29 – Johnson & Johnson and the Tylenol Scare– Did Recall Hurt or Help Shareholders?  Case #30– Infrastructure Funds– An SRI Investment? GLOSSARY