Many management theorists believe that most instances of insider trading in orga

Question

Many management theorists believe that most instances of insider trading in organizations occur because top managers did not establish a strong enough ethical tone. Others believe insider trading is based on poor leadership from top managers, which then trickles down to employees. What does cheating by insider trading information say about the ethical environment or leadership of a firm? How could virtue ethics provide a solution to cheating? Provide at least three examples in support of your view. Describe how virtue ethics education might be applied to a situation of insider trading cheating?

Explanation / Answer

The cheating by insider trading information is an unethical act. Taking insider trading as an act to be judged by law and not by the code of conduct criteria will be wrong. Because even if the act is not illegal it stands to be unethical. Whether intentionally or with self-interest but trading on information to an outsider will be considered wrong in the code of ethics. Cheating by insider trading shows that the ethical code of conduct of the firm is not strong and clear enough to the employees or the leader has not implied or cleared how important following the ethical code of conduct is for being in the firm. Making a code of conduct is not enough if a proper implementation of the same is not done which requires effective leadership, training and support and updating and intimation of the same to the employees. There should be an ongoing administration and code reinforcement to embed the organizational values into its work culture. This encourages the employees to work ethically and intimate with the leader about other involved in any unethical act.

Virtue ethics education is where the moral value of the insider stops him from any unethical act. Building a strong character by developing virtues and moral habits is the approach that can help one to refrain from unethical acts. Hence by getting virtue ethics one can monitor his own acts which can help him and his environment to be ethically strong.

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