Market integrity and ethics are so important in today’s global business operations. The market is made up of the consumers and the producers of goods and services and there is a need for integrity in the dealings between the two parties in the economy. Consumers need to be protected from selfish and unprofessional sellers in the market whose sole purpose is to exploit them for profits. Ethics is the code or standard of behavior that governs the parties in the market during transactions. In today’s market, a trend of integrity and ethical issues is on the high forcing the need for solutions to regulate the economy.
Consumers suffer the most from the market integrity and ethical issues. The importance of ethics and integrity in business cannot be understated. Producers mostly exploit the consumer by producing substandard products charging high prices. By producing low-quality goods, producers prevent consumer satisfaction leading to poor customer-business relationships. Consumers end up paying more than they should pay for the good making them develop negative post-purchase behavior against the seller or the business brand.
Another ethical issue in business is the lack of accounting integrity by the top-level management of the companies. Top-level managers put pressure on accountants of the business to cook values that will give a good image of the business in the external environment. Potential investors end up investing in businesses that do not represent the given market capabilities. Managers engaging in accounting fraud prevent the business from growing in leaps and bound by putting their selfish individual interests ahead of the business interest.
Insider information is another integrity and ethical issue that is common in today’s markets and economies. It refers to the use of information that is protected from the general public to make investments decision that will result in an individual gain. The business losses massively due to insider information. Employees that leak organization information to investors in the market are not ethical and have integrity issues. In real life, there are many cases of insider information that go unpunished making the act difficult to deal with.
An example of real-world market integrity and ethical issue is the scandal involving the US Senators. These selfish Senators used insider information to sell shares before the global pandemic of Coronavirus crashed the stock exchange market. Richard Burr, in particular, unloaded a huge number of shares in several transactions and gained as a result of the imbalance in the market information. These selfish leaders lack professional ethics and integrity that is important for any leader holding a public office. Consequently, they put their selfish interest ahead of the interest of the people that voted them into those positions.
In a difficult economic period brought by the global pandemic, these leaders were to come up with policies that will protect the markets in the long run. The Senator’s excuses on the scandal were based on the public information from the press but it is lacking objectivity. The fact that the benefitted significantly by having an information gain in the market points to the matter of insider information. Leaders should act as role models in the economy by giving solutions to problems and not cause a problem themselves.
Another ethical issue that affects the economy is the sale of counterfeits. Many producers copy other companies’ packages and sell their goods under these brands. Consumers consequently buy these goods without knowing they are fake and end up developing negative purchasing behaviors against the original brands. Major multinational companies with huge global brands have recently recorded lower sales due to counterfeits. This is a major integrity issue in business and should be punished severely.
The rise of counterfeit brands is can be explained by the lack of restrictions in free trade areas. Dishonest suppliers take advantage of the lack of regulations in the international markets. Integrity and ethical issues in the markets create rifts and disharmony among competitors in the economy. Market regulators should enforce major policies that will address the problem of counterfeits. Major reputational damages are caused to established business due to piracy of trademarks and copyrights. A lack of awareness of the dangers of counterfeits has also resulted in the increasing trend of the problem in the economy.
Financial fraud is another integrity and ethical issue that has negatively affected the economy. Due to advancements in technology, many transactions nowadays take place through the internet. Many businesses are making use of social media as an advertisement platform and this has raised the problem of financial fraud. Scammers in the economy take advantage of the internet by purporting to be doing business online and end up deceiving many consumers into buying their nonexistent goods and services. Many consumers in the economy have lost significant financial resources to online scams.
Financial fraud has been on a high in recent times and this is damaging the reputation of online businesses. The frauds pretend to work for online businesses and carry out these harms to both consumers and producers of goods and services. Lack of tight measures to curb financial fraud consequently leads to a lot of damages being done on the economy. The government should come with ways of protecting consumers from online fraud. Severe punishments can be imposed on individuals caught exploiting consumers and businesses.
In conclusion, the modern-day markets are facing major issues concerning integrity and professional ethics. There is a need to protect both producers and consumers of goods and services in the economy by ensuring there is a conducive trade environment that is free from malpractices. Major changes are required to address modern problems such as insider information. Businesses and companies should invest in information security to ensure there is a reduction of risk in the market. Online fraud should be handled with extreme penalties to discourage the issue in the economy.
References
Beneish, M.D., and Vargus, M.E., 2002. Insider trading, earnings quality, and accrual mispricing. the accounting review, 77(4), pp.755-791.
Diacon, S.R., and Ennew, C.T., 1996. Ethical issues in insurance marketing in the UK. A Journal of Marketing.
Mallin, C., and Ow-Yong, K., 2012. The UK alternative investment market–ethical dimensions. In Entrepreneurship, Governance, and Ethics (pp. 223-239). Springer, Dordrecht.
Shraim, I., Shull, M. and Hepworth, J., MarkMonitor Inc, 2014. Online fraud solution. U.S. Patent 8,769,671.
Snyder, J.M., 1999. Online Auction Fraud: Are the Auction Houses Doing All They Should or Could Stop Online Fraud. Fed. Comm. LJ, 52, p.453.
The Telegraph (2020) US senators accused of selling shares before coronavirus market crash. Available online at https://www.telegraph.co.uk/news/2020/03/20/us-senator-richard-burr-dumped-stocks-worth-16m-despite-reassuring/, accessed on May 15th, 2020.