Financial Ethics: A Positivist Analysis provides a framework for the study of financial ethics built on a broad review of mainstream scholarly research published in refereed finance and ecomics journals. The work is aimed directly at financial academics and students who are likely to be familiar with mainstream financial ecomics research. It demonstrates that ethics is already an important part of financial research, and therefore the approach taken here is more of a rediscovery of the ethical dimension of financial ecomics. This approach is important t only to remind fellow academics that ethics is a legitimate area of interest to positive financial ecomics, but also to encourage them to convey this message to their students without departing from mainstream financial theories and models. A distinctive feature of the text is that it adopts a positivist framework for the field of financial ethics. The text proposes that many finance problems are actually ethics problems; and that many ecomic phemena such as monitoring, bonding, certification, signaling, incentive contracts, and governance structures can be explained as mechanisms for controlling moral risks. The text discusses several examples in which an ethics-centered approach to understanding ecomic phemena is similar in spirit to other frameworks which have been applied in positive financial research including: the framework used for understanding corporate governance mechanisms as devices for mitigating agency costs and moral hazards in contractual relationships; the transaction governance structure framework that can explain the existence of hierarchies relative to markets when opportunistic behavior is assumed; and the roles of reputation and corporate culture in making credible commitments of trust in exchange. These financial ethical techlogies are t mutually exclusive but, rather, mutually enriching ways to deepen our understanding of the same ecomic phemena. They are financial techlogies because they enhance ecomic value; and, they are ethical techlogies because their value enhancing contributions are produced by mitigating moral risks in exchange.
The late George Aragon was Associate Professor of Finance at Boston College and Finance Department Chairman and Chairman of the Ethics Initiative Committee in the Carroll School of Management.