Bridge over ocean
1 May 2007 Financial Analysts Journal Volume 63, Issue 3

Local Ethics in a Global World

  1. Meir Statman, PhD

Ethics, fairness, trust, and freedom from corruption are parts of social capital, and social capital matters in financial markets. Investors consider not only the information they receive but also their trust in the accuracy of the information and the fairness of the markets in which to trade. Deficiencies in ethics and fairness mark all countries. But surveys of the perception among students and finance professionals of the fairness of insider trading in eight countries indicate that deficiencies are more pronounced in some countries than in others. Five factors are discussed that affect social capital: culture, globalization, income, education, and law enforcement.

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