Unethical Practices in Finance and Investment Decisions

After reading this article you’ll study about unethical practices in finance and investment decisions.

Unethical Practices in Finance:

The unethical practices in accounting are more in proprietary, partnership and personal restricted corporations. It is at lower levels in public ltd. companies and MNCs.

Some of the unethical form in financing and accounting are as under:

i. Deliberate abnormal delays in payments to (a) Vendors, (b) Dealers commissions and promotion prices.

ii. Delays in paying wages, interest to financiers, incentive, bonus to staff.

iii. Holding up bills of vendors on silly reasons and ultimately shopping from others to avoid payment to earlier vendors.

iv. Not precise in statutory payments of ESI, PF, Sales Tax and Excise Duties.

v. Cheating staff member of their dues towards medical expenses, leave travel assistance, children education fees etc.,

vi. Opening of current accounts in numerous banks to avoid changes against loans by earlier banker.

vii. Creating bogus bills of purchase to point out higher prices and hence losses to avoid bonus payment to staff.

viii. Collecting loans from private financiers at higher rate of interest to assist social groups and to induce kick-backs.

ix. Fast unleash of payments to established or adjustment parties and delaying payment to others.

x. Taking private finance solely from those who are ready to do personal favours to the finance chief.

Unethical Practices in Investment Decisions

Business and industries do need money. The requirement of funds is also long run, medium term and begin term type.

There are various approaches to boost funds as shown here under:

(1) Long Term Financing:

The popular sources for long run financing are as under:

i. Issue of equity shares,

ii. Issue of irredeemable debentures,

iii. Retained earnings (plough back of profits),

iv. Financial assistance from special finance establishments.

(2) Medium Term Financing:

The common sources of finance are as follows:

i. Issue of redeemable debentures,

ii. Issue of  preference shares,

iii. Public deposits,

iv. Medium Term loans,

v. Financial assistance from special financing establishments.

(3) Short Term Financing:

The ordinarily used modes of short term financing are:

i. Trade credit,

ii. Bank credit and

iii. Advances from dealers and customers.

While taking credit and through public problems the businesses have to be compelled to furnish the accounts and performance details including the details of promoters. To what extent truthful info and data is provided to financiers/investors is the ethical issue involved in investment matters.

Public is miss-lead by catchy advertising that draw a bright image of the corporate in sensible words mislead for investment in undeserving corporatons.