ETHICAL AND UNETHICAL ISSUES IN FINANCIAL MANAGERS AND MARKETING
Financial Managers
Ethical Issues Faced By Financial Managers
Financial managers prepare reports, oversee accounting functions, plan investment strategies and direct cash management functions. They also are involved in branch management functions at banks and other financial institutions.
1. Accuracy
A company’s financial manager ensures that all financial publications accurately and fairly reflect the financial condition of the company. Accounting errors and financial fraud, such as what was seen in the cases of Enron and World Com, damage the interests of shareholders, employees and affect confidence in the financial system.
2. Transparency
Financial documents reflect a company's performance relative to its peers, and its internal strengths and weaknesses. Regulatory agencies require publicly traded companies to submit periodic financial statements and make full disclosures of material information. A change in the senior executive ranks, buyout offers, loss or win of a major contract and new product launches are examples of material information.
3. Timeliness
Timely financial information is just as important as accurate and transparent information. Management, investors and other stakeholders require timely information to make the right decisions. Many cases exist of a publicly traded company's stock reacting sharply and negatively to negative earnings surprises or unpleasant product-related news.
4. Integrity
Financial managers should strive for unimpeachable integrity. Customers, shareholders and employees should be able to trust a financial manager's words. Managers should not allow prejudice, bias and conflicts of interest to influence their actions. Managers should disclose real or apparent conflicts of interest, such as an investment position in a stock or an ownership interest in one of the bidding companies for a procurement contract.
The unethical practices in accounting are more in proprietary, partnership and private limited companies. It is at lower levels in public limited companies and MNCs.
unethical practices in financing and accounting are as under:
- Deliberate abnormal delays in payments to (a) Vendors, (b) Dealers commissions and promotion costs.
- Delays in paying wages, interest to financiers, incentive, bonus to employees.
- Holding up bills of vendors on silly reasons and ultimately buying from others to avoid payment to earlier vendors.
- Not prompt in statutory payments of ESI, PF, Sales Tax and Excise Duties.
- Cheating employees of their dues towards medical expenses, leave travel assistance, children education fees etc.,
- Opening of current accounts in different banks to avoid adjustments against loans by earlier banker.
- Creating bogus bills of purchase to show higher costs and hence losses to avoid bonus payment to employees.
- Collecting loans from private financiers at higher rate of interest to help kith and kin and to get kick-backs.
- Quick release of payments to known or adjustment parties and delaying payment to others.
- Taking private finance only from those who are ready to do personal favors to the finance department head.
While taking credit and during public issues the companies have to furnish the accounts and performance details including the details of promoters. To what extent truthful information and data is provided to financiers/investors is the ethical issue involved in investment matters.
MARKETING
Marketing ethics Marketers’ standards of conduct and moral values. Many companies create ethics programs to train employees to act ethically. Employees’ personal values sometimes conflict with employers’ ethical standards
1. ETHICS IN MARKETING RESEARCH
- Invalid or unreliable research studies.
- Invasion of consumer privacy, not respecting confidentiality.
- Disguising sales as research.
- Failure to secure voluntary and informed participation.
- Competitive intelligence gathering.
Consumers are concerned about privacy, and Internet has increased privacy concerns.
2. ETHICS IN DISTRIBUTION
What is the appropriate degree of control over the distribution channel?
Should a company distribute its products in marginally profitable outlets that have no alternative source of supply
3. ETHICS IN PROMOTION
Truth in advertising is the bedrock of ethics in promotion.
Marketing to children has come under increased scrutiny.
Marketing beer to college students, including through providing promotional items such as shirts and hats, raises ethical questions.
4. ETHICS IN PRICING
Most regulated aspect of a firm’s marketing activities.
UNETHICAL ISSUES IN MARKETING
Avoiding unethical marketing practices can also help a business avoid other consequences, such as losing the good faith and loyalty of customers, and jeopardizing profitability. The worst practices of the bunch are:
1. MISLEADING
Misleading statements, which can land a business in legal trouble with the Federal Trade Commission and its truth in advertising provision. Consumers may turn a deaf ear to a product that claims to be “the best,” and they're known to disdain marketing that promises to “transform their life” or “make them the envy of all their friends.
2. EXPLOITING
emotions or a news event. Such instances pop up every once in a while, then make a quick exit when consumers complain about feeling manipulated. Such was the case after the September 11 terrorist attacks, when some advertisers tried to evoke sympathy – for New Yorkers, firefighters and survivors – while also selling their products.
3. STEREOTYPING
Depicting women as sex symbols merely to draw attention to a product. "While it might be intuitive to use models in adverts for beauty products and cosmetics, having half-naked models in adverts for generators, heavy machinery, smartphones and other products not strongly related to women is both nonsensical and unethical,” says Profitable Venture.
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