The two main investment objectives – risk and return – are intertwined.
An effective framework for ethical decision-making should allow investment professionals to examine their choices in the context of conflicting interests.
Laws often codify ethical behavior, but legal and ethical conduct are not always the same.
There are several challenges that can make ethical behavior difficult. The first of these is overconfidence. Most people believe they are more ethical than average, even though this cannot be true in aggregate. Overconfidence can lead to faulty decision-making, and a failure to consider all of the relevant inputs to analyze a situation. A second…
Earnings quality is in the eye of the beholder. It has variously been defined as :
• Earnings that reflect underlying economic effects.
• Earnings that are better estimates of cash flows.
• Earnings that are more conservative (lower).
• Earnings that are predictable.
As a relatively young profession, investment management has not established the same level of professionalism as other industries. Further, because of the interconnected global nature of the profession, local regulatory bodies have less influence and can often issue conflicting laws. Recognizing these shortcomings, CFA Institute has striven to become an advocate for best practices worldwide….
“Ethics and Trust in the Investment Profession” is a reading included in the Level I curriculum for the CFA(R) Program.
Not everyone engaged in investment management is a professional – they have not undergone specific training or become members of a professional body.
There are several ways professions go about building trust among their customers and society at large.
A profession is a vocation that requires specialized education and training. Professional communities reinforce best practices among their participants and often create codes of ethics to codify certain behaviors as either required or forbidden. These codes of ethics act as a general guideline for how professionals should act. In many cases, the codes are expanded…