Course description

Title of the Teaching Unit

Ethics in Finance

Code of the Teaching Unit

22MAF20

Academic year

2026 - 2027

Cycle

Number of credits

5

Number of hours

60

Quarter

1

Weighting

Site

Montgomery

Teaching language

English

Teacher in charge

DUMAS Christel

Objectives and contribution to the program

At the end of the course, students should be able to:
Knowledge and Understanding
• Explain the foundations of ethics and their relevance for financial decision-making.
• Distinguish ethical standards from legal and regulatory requirements.
• Compare major ethical theories and evaluate their implications for business and finance.
• Explain the origins of unethical behaviour in organizations and financial markets.
• Understand stakeholder theory, agency theory, governance mechanisms and professional ethical standards.
• Explain the role played by the CFA Institute Code of Ethics and Standards of Professional Conduct in the investment industry.
Applied Skills
• Analyse ethical dilemmas using structured ethical decision-making frameworks.
• Evaluate financial decisions from the perspective of multiple stakeholders.
• Assess risks, governance failures and potential societal consequences of business decisions.
• Formulate justified recommendations when facing ethical uncertainty.
• Communicate and defend ethical positions in an evidence-based and professional manner.
• Design and discuss alternative solutions compatible with both economic performance and societal responsibility.

3. Contribution to ICHEC Programme Competencies
1. Self-development
The course encourages continuous learning through independent readings, preparation of case analyses and engagement with professional standards. Students are invited to reflect on their own values, assumptions and future professional responsibilities. Through debates and interactions with peers and practitioners, they learn to challenge their perspectives and develop intellectual curiosity.
Activated competencies: 1.1, 1.2, 1.3, 1.4
Assessed competencies: 1.2, 1.3

2. Critical Thinking
Critical thinking constitutes one of the central dimensions of the course. Students examine complex financial scandals, question information sources, analyse competing perspectives and evaluate established theories against real-world situations. They learn to distinguish facts, assumptions and value judgments while applying rigorous analytical frameworks.
Activated and assessed competencies: 2.1, 2.2, 2.3, 2.5

3. Designing Desirable Futures
The course explores ethical finance, responsible investment, ESG considerations, microfinance, impact investing and alternative governance models. Students analyse how finance can contribute positively to society and are encouraged to imagine responsible and sustainable approaches to value creation.
Activated and assessed competencies: 3.2, 3.4, 3.5

4. Decision-Making
Ethical decision-making is the core competence developed within this course. Students learn to analyse contexts, identify stakeholders, assess risks, apply ethical frameworks, justify managerial choices and evaluate the consequences of decisions. Governance mechanisms and responsible management principles are studied as tools to improve decision quality.
Activated and assessed competencies: 4.1, 4.2, 4.3, 4.4, 4.5, 4.6, 4.7

5. Entrepreneurship
Through the analysis of innovative approaches to responsible finance and the design of ethical solutions to financial dilemmas, students learn to navigate uncertainty and propose economically viable solutions with positive societal impact.
Activated and assessed competencies: 5.2, 5.4

6. Communication
The course requires students to communicate complex ethical arguments both orally and in writing. Debates, presentations and case analyses provide opportunities to develop clear, structured and persuasive communication adapted to different audiences and contexts.
Activated and assessed competencies: 6.1, 6.2, 6.3, 6.4

7. Collaboration
Collaborative learning is fostered through group presentations, debates, peer discussions and collective case analyses. Students are expected to demonstrate active listening, constructive participation and respect for diverse viewpoints.
Activated competencies: 7.1, 7.2, 7.4, 7.5
Assessed competencies: 7.1, 7.4
2. Exercer une pensée critique
La pensée critique constitue l'une des dimensions centrales du cours. Les étudiant·es examinent des scandales financiers complexes, interrogent les sources d'information, analysent des perspectives contradictoires et confrontent des théories établies à des situations réelles. Iels apprennent à distinguer les faits, les présupposés et les jugements de valeur tout en appliquant des cadres d'analyse rigoureux.
Compétences activées et évaluées : 2.1, 2.2, 2.3, 2.5

3. Concevoir des futurs souhaitables
Le cours explore la finance éthique, l'investissement responsable, les critères ESG, la microfinance, l'investissement à impact et des modèles de gouvernance alternatifs. Les étudiant·es analysent la manière dont la finance peut contribuer positivement à la société et sont encouragé·es à imaginer des approches responsables et durables de la création de valeur.
Compétences activées et évaluées : 3.2, 3.4, 3.5

4. Décider
La prise de décision éthique constitue la compétence centrale développée dans ce cours. Les étudiant·es apprennent à analyser des contextes, identifier les parties prenantes, évaluer les risques, appliquer des cadres éthiques, justifier des choix managériaux et évaluer les conséquences des décisions. Les mécanismes de gouvernance et les principes de gestion responsable sont étudiés comme des outils permettant d'améliorer la qualité des décisions.
Compétences activées et évaluées : 4.1, 4.2, 4.3, 4.4, 4.5, 4.6, 4.7

5. Entreprendre
À travers l'analyse d'approches innovantes en matière de finance responsable et la conception de solutions éthiques à des dilemmes financiers, les étudiant·es apprennent à composer avec l'incertitude et à proposer des solutions économiquement viables ayant un impact sociétal positif.
Compétences activées et évaluées : 5.2, 5.4

6. Communiquer
Le cours demande aux étudiant·es de communiquer des arguments éthiques complexes, tant à l'oral qu'à l'écrit. Les débats, présentations et analyses de cas offrent des occasions de développer une communication claire, structurée et persuasive, adaptée à différents publics et contextes.
Compétences activées et évaluées : 6.1, 6.2, 6.3, 6.4

7. Collaborer
L'apprentissage collaboratif est favorisé par les présentations de groupe, les débats, les discussions entre pairs et les analyses de cas collectives. Les étudiant·es sont invité·es à faire preuve d'écoute active, de participation constructive et de respect pour la diversité des points de vue.
Compétences activées : 7.1, 7.2, 7.4, 7.5
Compétences évaluées : 7.1, 7.4

Prerequisites and corequisites

none

Content

Financial decisions influence individuals, organizations, markets and society as a whole. Finance plays a crucial role in allocating resources, supporting economic activity and enabling long-term value creation. While financial professionals are expected to generate sustainable financial performance, they must also act responsibly and navigate ethical challenges arising from conflicts of interest, information asymmetries, cognitive biases, governance failures and societal expectations.
This course provides students with conceptual frameworks and practical tools to identify, analyse and address ethical dilemmas in finance. Through the study of financial scandals, stakeholder conflicts, professional standards and responsible finance initiatives, students develop the ability to critically evaluate financial decisions and justify ethical choices in complex situations.
The course combines theoretical foundations, case studies, debates, guest speakers, collaborative learning activities and applied projects. Particular attention is given to developing critical thinking, ethical decision-making, responsible management and communication skills expected from future finance professionals.
 
Topic 1: What is ethics in finance? Definition, purpose, ethical decision-making theories and frameworks
Topic 1: cont’d
Philosophical Approaches to Ethics: The Friedman Doctrine; Utilitarian and Kantian Ethics; Rights Theories; Justice Theories

Topic 2: Why do financial scandals occur? The roots of unethical behavior, Agency theory, conflicts of interests, cognitive biases and stakeholder analysis.
Topic 3: How to prevent unethical behaviour/financial scandals?
Part 4 – What are the most common ethical challenges in Personal / retail finance
Part 4 – WHAT are the most common ethical challenges in Financial markets. Insider trading, hostile takeovers, derivatives, HFT…
Part 4 – WHAT are the most common ethical challenges in the Investment industry? Fund management, ESG, microfinance, impact,…
Part 4 – WHAT are the most common ethical challenges in corporate governance. Commitment to Ethics by Firms, Hiring and Promotion, Organizational Culture and Leadership, Decision-Making Processes, Strong Corporate Governance, Moral Courage, Ethics Officers

Teaching methods

The course adopts an active-learning approach combining:
• Interactive lectures
• Case studies
• Structured class debates
• Group presentations
• Guest speakers
• Independent reading and preparation
• Collaborative learning activities
• Oral discussions and role-play exercises
Students are expected to actively contribute to class discussions and demonstrate engagement with the assigned materials.

Assessment method

Students are assessed on:
- Group presentation and debate leadership 15%
- Participation in class debates 15%
- Fictional case study 10%
- Final oral examination 60%

Assessment Criteria
Students will be assessed on their ability to:
• Apply ethical theories and decision-making frameworks.
• Analyse complex business situations.
• Integrate multiple stakeholder perspectives.
• Develop coherent and justified recommendations.
• Communicate effectively in English.
• Demonstrate critical thinking and intellectual rigour.
• Collaborate constructively in group activities.

Use of Artificial Intelligence
Students may use generative AI tools (e.g. ChatGPT, Claude) to support their learning — for instance, to clarify concepts, structure ideas, or proofread written work. However, AI tools may not be used to generate final submitted content, whether written analyses, case study answers, or oral exam preparation notes, without critical review and personal input from the student. Any use of AI must be transparent and properly acknowledged where requested by the instructor. Students remain fully responsible for the accuracy, originality, and ethical soundness of their submitted work. Uncritical reliance on AI-generated content, particularly for ethical reasoning and argumentation, is inconsistent with the learning objectives of this course and may be penalised.

References

Books & Handbooks

Beauchamp, T. L., & Bowie, N. E. (2001). Ethical Theory and Business (7th ed.). New York: Pearson, Prentice Hall, pp. 17–23.
Boatright, J. R. (Ed.). (2010). Finance Ethics. Hoboken, NJ: John Wiley & Sons.
Bazerman, M. H., & Moore, D. A. (2013). Judgment in Managerial Decision Making (8th ed.). Hoboken, NJ: John Wiley & Sons.
CFA Institute. Standards of Practice Handbook (11th ed.).
Copeland, T., Koller, T., & Murrin, J. (1996). Valuation: Measuring and Managing the Value of Companies. New York: Wiley.
Donaldson, T. (1989). The Ethics of International Business. Oxford: Oxford University Press.
Freeman, R. E. (1984). Strategic Management: A Stakeholder Approach. Boston: Pitman Press.
Galbraith, J. K. (1970). The New Industrial State. Boston: Houghton Mifflin.
Kaplan, R. S., & Norton, D. P. (2004). Strategy Maps. Boston: Harvard Business School Press.
Macmillan, I. C., & Jones, P. E. (1986). Strategy Formulation: Power and Politics. St. Paul, MN: West.
March, J. G., & Simon, H. A. (1958). Organizations. New York: Wiley.
Marris, R. (1964). The Economic Theory of Managerial Capitalism. London: Macmillan.
Milgram, S. (1974). Obedience to Authority: An Experimental View. New York: Harper & Row.
Penrose, E. T. (1958). The Theory of the Growth of the Firm. London: Macmillan.
Rawls, J. (1999). A Theory of Justice (rev. ed.). Cambridge, MA: Belknap Press. (Original work published 1971)
Ross, L., & Nisbett, R. E. (1991). The Person and the Situation: Perspectives of Social Psychology. New York: McGraw-Hill.

Journal Articles

Darley, J. M., & Batson, C. D. (1973). From Jerusalem to Jericho: A study of situational and dispositional variables in helping behavior. Journal of Personality and Social Psychology, 27(1), 100–108.
Eesley, C., & Lenox, M. J. (2006). Firm responses to secondary stakeholder action. Strategic Management Journal, 27, 13–24.
Fama, E. F. (1980). Agency problems and the theory of the firm. Journal of Political Economy, 88, 375–390.
Hill, C. W. L., & Jones, T. M. (1992). Stakeholder-agency theory. Journal of Management Studies, 29, 131–154.
Hill, C. W. L., & Phan, P. (1991). CEO tenure as a determinant of CEO pay. Academy of Management Journal, 34, 707–717.
Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3, 305–360.
Jensen, M. C., & Murphy, K. J. (1990). Performance pay and top management incentives. Journal of Political Economy, 98, 225–264.
Lane, P. J., Cannella, A. A., & Lubatkin, M. H. (1998). Agency problems and antecedents to unrelated mergers and diversification: Amihud and Lev reconsidered. Strategic Management Journal, 19, 555–578.
Liberman, V., Samuels, S. M., & Ross, L. (2004). The name of the game: Predictive power of reputations versus situational labels in determining prisoner's dilemma game moves. Personality and Social Psychology Bulletin, 30(9), 1175–1185.
Porac, J. F., Wade, J. B., & Pollock, T. G. (1999). Industry categories and the politics of the comparable firm in CEO compensation. Administrative Science Quarterly, 44, 112–144.
Tosi, H. L., & Gomez-Mejia, L. R. (1994). CEO compensation monitoring and firm performance. Academy of Management Journal, 37, 1002–1016.

Reports & Press Articles

"Another Enron? Royal Dutch Shell." (2004, March 13). The Economist, p. 71.
CFA Institute & Edelman. (2013). Investor Trust Study. http://www.cfapubs.org/doi/pdf/10.2469/ccb.v2013.n14.1
Economist Intelligence Unit. (2013). A Crisis of Culture: Valuing Ethics and Knowledge in Financial Services (Report sponsored by CFA Institute).
Edmonson, G., & Cohn, L. (2004, January 12). How Parmalat went sour. Business Week, pp. 46–50.
Gellerman, S. W. (1989). Why good managers make bad ethical choices. In K. R. Andrews (Ed.), Ethics in Practice: Managing the Moral Corporation. Cambridge, MA: Harvard Business School Press.
Gold, R., & Wilke, J. R. (2004, February 5). Data sought in Halliburton inquiry. Wall Street Journal, p. A6.
Henry, D., & Stead, D. (2006, October 30). Worker vs CEO: Room to run. Business Week, p. 13.
King, N. (2004, January 23). Halliburton tells the Pentagon workers took Iraq deal kickbacks. Wall Street Journal, p. A1.
Kirkland, R. (2006, July 10). The real CEO pay problem. Fortune, pp. 78–82.
Rappaport, A. (1999, March–April). New thinking on how to link executive pay with performance. Harvard Business Review, pp. 91–105.
Timet. (2001, June). Boeing settle lawsuit. Metal Center News, 41, 38–39.
Velocci, A., Fulghum, D. A., & Wall, R. (2003, December 1). Damage control. Aviation Week, pp. 26–27.
Ward, A. (2006, May 26). Home Depot investors stage a revolt. Financial Times, p. 20.
"Whistleblowers say company routinely overcharged." (2004, February 12). Reuters.
Zimbardo, P. G. (1971). The Power and Pathology of Imprisonment: Hearings Before Subcommittee No. 3 of the Committee on the Judiciary, 92nd Congress, Corrections: Part II, Prisons, Prison Reform, and Prisoners' Rights (Congressional Record, Serial No. 15, October 25, 1971).