Blackwell Reference Online

Extract

For many, the conjunction of corporate finance and ethics is oxymoronic. This reaction is justified by the financial scandals of recent years, when financial activities were reported with an intensity not seen since the Depression. In fact, for centuries financial activities of necessity have had to be conducted according to higher than existing normal standards of trust and responsibility. Of all human endeavors, financial transactions are most dependent on the exchange of intangible items (clay tablets, pieces of paper) and on the exchange of promises to perform at some time, often distant, in the future. This does not mean, of course, that finance has not attracted its share of charlatans – often the development of new financial tools has been accompanied by those eager to cash in on the desperation of the distressed and the naiveté of the ignorant. Many depositors lost money in the period of Wildcat Banking, and the early days of the insurance industry were characterized by widespread fraud. Although particular institutions and structures are characteristic of each historical period, there is evidence that the basic functions have been in operation for over 5,000 years. The Code of Hammurabi, which dates to about 2,100 bc , contains provisions that indicate active business and financial sectors were already well developed. The ethical responsibilities of the parties have probably ... log in or subscribe to read full text