• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Ethical investment.

Extracts from this document...

Introduction

Ethical investment Ethical investment can be defined as the integration of personal values with investment decisions1. The principle of shareholders wealth maximization relates, to the role of companies as agents of shareholders to maximize the returns for shareholders, in doing so there are incentives available for some companies to minimize cost (Negative), at the expense of social and ethical considerations. Others will work towards better and newer innovations (Positive), to boost the shareholders wealth in conjunction with an active and ethical role within the community. The principles of ethics can be both in conflict with and not in conflict with profit maximization depending on the viewpoints of the company. This statement can be confirmed through the analysis of issues such as, environment, human rights, workplace practices and animal welfare, through different companies focusing on distinct positive and negative issues aspects. The Body Shop International is a manufacturer and retailer of skin and hair care and cosmetic products. This company is well known for its high level of ethical standards that it sets, on various issues and it's success in maximizing shareholder's wealth: * On Environment the body shop has set as it's mission to act in a way which would protect the environment, both locally and globally. ...read more.

Middle

Products tested include drugs, cosmetics, household products, surgical implants, household cleaners and agrochemicals, causing these animals extreme amounts of pain and suffering. The company is highly successful as revenue of the company increased by 3% to 1.6 billion6, but ethical standards was in conflict. In conclusion, it can be seen through the above examples that the conflict, between the principles of ethics and shareholder's wealth maximization can be avoided given that people are willing to come up with newer and more innovative ideas to maximize return. However conflict will still exist if the principle of shareholder's wealth maximization is to be ranked ahead of the principles of ethics, as people will be lazy and just cut cost to improve wealth rather than be innovative, however this method does have a downside to it, as contingent liabilities might arise through their operations. Impacts on the all ordinaries index (AOI) Globalisation of markets: A major contributor to the changes on the AOI would be the global market it self, due to globalisation stock markets are now interconnected with one and another, if a major market like America falls it's loss will echo through to other markets such as Australia, this is due to the growth in foreign ownership of Australian shares by other major overseas companies, also the ties in trade and other financial activities linked with other countries especially the US. ...read more.

Conclusion

77,200 jobs were created and as a result, the housing sector is expected to recover19. Stabilizing of unemployment will lead to a stabilizing of bond prices and gradual decrease in bond prices. Exchange Rates The Australian economy has been performing well compared to the global economy, but the Australian dollar has become weaker this quarter. The Australian dollar dropped from US$51.92 to US$51.20 in September 2001. The US financial market heavily influences Australia and so the downturns in the US economy have affected the Australian dollar and the bond market20. The implied yield of the December bank bill futures contract closed below the cash rate at 4.59%. Other influential factors: 1. Bond prices are influenced by their demand. One particular bond has been issued on behalf of Cairns Waste Management Group to fund a waste treatment plant21. Theoretically, an ethical investor will prefer this security over less environmentally friendly stocks. This will result in a general price increase for bonds. 2. There has been a sudden surge in the corporate bond market recently22. This can be attributed to two factors. Firstly, there has been a reduction of government borrowing, and therefore less government bonds issued. Secondly, fixed income assets have become very popular because of compulsory superannuation moving from defined benefit to defined contribution. This has the effect of increasing bond prices, especially corporate bonds. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Economy & Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Economy & Economics essays

  1. Economics of European Integration

    a competitive market: it actually concerns the number of players in the industry. On the contrary, privatisation directly concerns the ownership. It is important to note that it is possible to have a non-liberalised market with a private ownership as well as a liberalised market with a public ownership.

  2. Critically evaluate the perceived competitive starategies of the five clothing retail outlets, namely Edgars, ...

    The tariff reduction timetable gives the non-competitive domestic producers a grace period in which to increase efficiency. Textile tariffs will be reduced over twelve years from 100% to 45% on clothing, from 50% to 25% on fabrics, from 35% to 17.5% on yarn, from 15% to 10% on fibers, and from 60% to 30% on household textiles.

  1. The project objective is to investigate the practices of privatization in traditional market economies ...

    Preparation for Liberalization The privatization of SingTel was also done to prepare for liberalization of the industry in later years. Liberalization of this industry was seen as necessary to meet the growing and changing demand of telecommunication services resulting from technology advances.

  2. Industry sector: coffee exporting

    In case the Ukrainian currency rises in price, currency options may used to hedge the currency exchange risks. Currency options allow the company to buy or sell certain amount of hryvnas at a specified price before the specific date. Such an option may help the company to avoid possible results of unfavorable currency movements.

  1. Environmental Analysis Of Landis Lund.

    the more disposable income citizens have, spending more and contributing more taxes, and the more workers there are, the less the government have to give back in the form of benefits. The UK is an example of a mixed economy. It is within this mixed economy that Landis Lund operate.

  2. The Quest for Optimal Asset Allocation Strategies in Integrating Europe.

    Hence, a 'risky' asset (that is, an asset with a high variance) can actually lower the portfolio variance if it has a low covariance with the assets that have a high weight in the portfolio. As a consequence, for the same level of risk, the performance of a diversified portfolio

  1. Global Business Plan.

    * Intense Competition in this sector. * Quality Improvements * Production Capacity Expanding * Prices Falling. Financial Health of China: China, the world's most populous nation, experienced rapid economic growth over the last twenty years, which brought its GNP per capita to EUR 953 in 2000.

  2. The un-utopian issue

    a larger scale economy where monetary power becomes essential, therefore changing its nature. 1.b) Centrally Planned Economy: Differing with a traditional economy, a planned system is at an enormous scale. It is administrated by the State (which acts as a high command), and is possibly the most complicated economic system to manage.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work