7. Private Equity and Ethics: A Culture Clash

  1. Cyril Demaria

Published Online: 1 JUL 2013

DOI: 10.1002/9781118700525.ch7

Introduction to Private Equity: Venture, Growth, LBO & Turn-Around Capital, Second Edition

Introduction to Private Equity: Venture, Growth, LBO & Turn-Around Capital, Second Edition

How to Cite

Demaria, C. (2013) Private Equity and Ethics: A Culture Clash, in Introduction to Private Equity: Venture, Growth, LBO & Turn-Around Capital, Second Edition, John Wiley & Sons Ltd, Chichester, UK. doi: 10.1002/9781118700525.ch7

Publication History

  1. Published Online: 1 JUL 2013
  2. Published Print: 28 JUN 2013

ISBN Information

Print ISBN: 9781118571927

Online ISBN: 9781118700525

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Keywords:

  • investment;
  • malpractices;
  • philanthropy;
  • private equity;
  • transparency

Summary

This chapter explains the dynamics of potential malpractices in private equity and attempts to classify and derive some lessons from them. The more an economic sector develops, the more it tempts individuals willing to benefit from this growth at all costs. Legal sanctions are not enough to guarantee that private equity can be practiced in safe conditions. As getting rich quick is considered to be socially abnormal, successful individuals decided to buy themselves some moral credentials through philanthropy. To limit inequalities and establish some boundaries for market or public intervention, the main rule which was applied was transparency. However, this solution has proven to be imperfect and private equity has to work on deontology, self-regulation and ethical behavior. It is only checks and balances that can reconcile the market's need for flexibility and the public need for collective and individual protection from predatory practices.