Question

briefly explain the ethical responsibilities financial mangers have in relation to the firms stakeholders

Answer 1

Financial managers are at centre of keeping interest of firms stakeholders. Financial managers when taking decisions on behalf of the company should see that whether those are ethical or not and also see that does not harm stakeholders interest.

Few ethical responsibilities of financial manager are:

1. Related Party Transaction: Financial managers should see that RPT should be minimum as possible and should be in line with the norms of regulatory authority. As this may harm the impression of the company and as a result it will be harmful to the stakeholders.

2. Compensation of higher management : Financial Managers should see that compensation of higher management should be inline average industry compensation. If higher management compensation is higher then it may effect the shareholders return on equity

3. Raising of Capital for the firm : While raising the capital for the firm financial manager should see that the debt level of firm should be at the appropriate level and does not go beyond certain level making company risky.

4. Bribery : Financial manager should ensure that there should not be any unappropiate dealings in financial transcation of firm.