Question

Ethical issues are normal and predictable, but we need to deal with them effectively. Within ethics, moral malleability is defined as the temporary flexing of moral standards with a purpose of justifying (consciously or unconsciously) immoral choices and behavior when it is legal in the short or long run. Please re-read the cases we have introduced in class, choose one case, and answer the questions following the cases keeping in mind the material we have covered so far in Capital Markets:

Ranjib is part of an analyst team that has drafted a positive research report for an automobile company that employs thousands of people in Ranjib’s community, where it also sells automobiles. The report rates the company as a strong "buy". Ranjib has learned that, for years, the company has secretly been disposing toxic chemical waste in a way that is harmful to the environment. He informs his colleagues of this new information and suggests they downgrade the company prior to the news becoming public. The other analysts do not want to make a change to the stock recommendation. He defers to his colleagues’ decision.

Are there negative situational influences and/or conflicts of interest in this scenario? Explain differentiating situational influences from conflicts of interest (50 to 100 words)

Answer 1

Ranjib faces situational influences from community pressures and conflicts of interest related to maintaining relations with the automobile company while dealing with ethical issues regarding environmental harm.

Step-by-step explanation:

In the scenario with Ranjib, there are both negative situational influences and conflicts of interest. The situational influence arises from the pressure to protect the interests of the automobile company that employs a large population in the community, which can impact the analysts' objectivity. On the other hand, a conflict of interest is present because the analysts have an implicit interest in maintaining good relations with the company, presumably for continued business or community standing, which may be affecting their unwillingness to update the stock recommendation based on the new negative information about environmental harm.