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'Ethical business key to economic turnaround'

Leading academics, legal and accounting experts today urged businessmen to display ''moral behaviour'' to develop the Indian economy.

They suggested investor education for prudential behaviour of the investors. They said non-governmental organisations, business houses and trade associations have to play an intermediary role.

Participants at a national seminar on ''Ethical Issues in Business and Finance'', organised jointly by the Institute of Chartered Accountants of India and Shri Ram College of Commerce, said financial disclosures should focus more on quality rather than quantity of information.

Business enterprises throughout the world which have adopted good ethical practices have been successful. Market capitalisation in such enterprises is very high and there is disclosure of more information, they said.

They said timely disclosures of information would attract more capital to the companies concerned leading to lower cost of capital and improved performance.

Financial reporting has a crucial role to play in the ethical behaviour and will lead to overall competitive advantage for the company. In future, financial reporting would cover the information about intangible assets and adopting international practices.

The ethics followed in the profession and business should be much higher than legal requirements. Even if something is legal it may not be ethically correct, the experts said.

They said business ethics went much beyond ethics itself. Business ethics could be adopted at institutional and executive levels. Institutional level involves abiding by the laws of land, commitment to national development, transparency in its operation, social responsibilities and value-based management. At the executive level, the incumbents have to act as agents of owners.

Another view expressed was that the cost of unethical behaviour was very high and would affect the people at the grassroots level.

India is a sellers market, speakers opined. Unscrupulous businessmen encouraged by equally unscrupulous consultants to exploit the public. Finance companies siphon off thousands of millions of rupees of investors and then they vanish into thin air. However stringent the laws may be, they cannot be of any use in operation unless there is ethics in business and finance.

Another view was that honest businessmen may have to pay a price in the initial years of transition but they can afford to do so.

UNI

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