2. Ethical Implications of Finance

  1. John R. Boatright
  1. Robert W. Kolb

Published Online: 13 DEC 2011

DOI: 10.1002/9781118266298.ch2

Finance Ethics: Critical Issues in Theory and Practice

Finance Ethics: Critical Issues in Theory and Practice

How to Cite

Boatright, J. R. (2010) Ethical Implications of Finance, in Finance Ethics: Critical Issues in Theory and Practice, John Wiley & Sons, Inc., Hoboken, NJ, USA. doi: 10.1002/9781118266298.ch2

Author Information

  1. Professor of Finance and the Consider Chair of Applied Ethics, Loyola University Chicago

Publication History

  1. Published Online: 13 DEC 2011
  2. Published Print: 9 AUG 2010

ISBN Information

Print ISBN: 9780470499160

Online ISBN: 9781118266298



  • behavioral finance;
  • efficient market hypothesis (EMH);
  • ethical implications of finance;
  • fairness;
  • risk aversion;
  • risk management


This chapter considers the most salient features of the finance view of the world and examines key finance perspectives from a normative point of view. Each section proceeds by briefly describing some key ideas and then indicating some of their ethical implications. The discipline of finance assumes that people are risk averse-that is, that they prefer to avoid risk. This assumption reflects a view of human nature that is well-confirmed for most people in most situations. The chapter focuses on the semi-strong form of the efficient market hypothesis (EMH), which for a long period garnered the allegiance of many in finance and still provides a key starting point for understanding security markets. It briefly talks about some recent thinking regarding risk management, and considers behavioral finance. Finally, the chapter talks about two important aspects of behavioral finance: the attack on the EMH and the importance of fairness.

Controlled Vocabulary Terms

behavioral finance; efficient market hypothesis; risk management