The last years have seen a surge of scandals in financial intermediation. This article argues that the agency structure inherent to most forms of financial intermediation gives rise to conflicts of interest. Though this does not excuse scandalous behavior it points out market imperfections. There are four types of conflicts of interest: personal-individual, personal-organizational, impersonal-individual, and finally, impersonal-organizational conflicts. Analyzing recent scandals we find that all four types of conflicts of interest prevail in financial intermediation.

ABSTRACT:We focus on the core institution of the capital market and the institutional work of professional service firms that provide ratings on corporate issuers, initially in a bid to maintain this institution, which suffered when those involved relied solely on information from the issuers themselves. Through our analysis we identify a new type of decoupling—complicit decoupling. Complicit decoupling evolves over time, beginning with the creation of a new practice, here corporate ratings as a form of policing work, which emerges to (...) help to maintain a core institution. This practice is then adopted, implemented and later becomes decoupled. Exposure does not undermine the legitimacy of the practice because external actors collude in the ‘window dressing’ and, because it has become normalized, only partial repairs are enacted. It is by nature field-level institutional work, benefiting the majority of the field and inherently involves a violation of promise keeping. We conclude with implications for managers and behavioral ethics researchers. (shrink)

The current proxy voting system in the United States has become the subject of considerable controversy. Because institutional investment managers have the authority to vote their clients’ proxies, they have a fiduciary obligation to those clients. Frequently, in an attempt to fulfill that obligation, these institutional investors employ proxy advisory services to manage the thousands of votes they must cast. However, many proxy advisory services have conflicts of interest that inhibit their utility to those seeking to discharge their fiduciary duties. (...) In this article, we describe the current proxy advisory network as an example of how current notions of conflicts of interest fall short when explaining the behavior of an interconnected set of market players whose remit is to act in the best interests of their investors. We discuss what participants in this system should do to bring transparency and accuracy to the proxy advice industry. (shrink)

Most incidences of dishonesty in research, financial investments that promote personal financial gain, and kickback scandals begin as conflicts of interest (COI). Research indicates that healthcare professionals who maintain COI relationships make less optimal and more expensive patient care choices. The discovery of COI relationships also negatively impact patient and public trust. Many disciplines are addressing this professional issue, but little work has been done towards understanding and applying this moral category within a nursing context. Do COIs occur in nursing (...) and are they problematic? What are the morally appropriate responses to COI for our discipline and for individual practicing nurses? In this paper I examine the nature of 'conflict of interest' as a general ethical category, its characteristics and its application to our discipline. Conflict of interest is an odd moral category that may actually or potentially result in immoral decisions. The moral justification for COI is grounded prime facie by the moral value of respect for persons and principle of fidelity from which trust is developed and maintained. In review of the historical development, there appears to be consensus on some qualities of COI that are presented. I conclude that making judgements about COI are challenging and often difficult to determine from a nursing perspective. Improving nurses' and professional organizations' awareness of COI and sharpening our ability to respond appropriately when COI arise can reduce potential harm and promote trust in those whom we serve. (shrink)