Code of Ethics

Official standards of conduct or guiding principles that a professional is expected to follow in individual or combined capacity

What is the Code of Ethics?

Code of ethics refers to the official standards of conduct or guiding principles that a professional is expected to follow in an individual or combined capacity. A code of ethics can exist at various levels and across different functions. There is a corporate code of ethics (CCE), as well as one for academic research, media, working professionals (such as medical practitioners); the list is virtually endless.

 

Code of Ethics

 

Categories of Corporate Code of Ethics

Experts categorize the codes into:

  1. Content-oriented – Ones that look into the actual codes
  2. Output-oriented – Looking at the impact of the codes
  3. Transformation-oriented – Generally finds out whether the codes are in practice

 

A review concluded that most of the studies dealt with the content of the codes, and the content was the same across all countries, with certain country-specific issues. According to the review, there is a distinct lack of clear insights into how CCEs affect and influence behavior in organizations. Most human behavior related to the corporate code of ethics is a question of perception and not action.

In 2001, academician Schwartz defined the code of ethics as a well-documented and written code that could be utilized as a guideline for employee behavior.

A structured corporate code of ethics is something that can be found in all modern organizations. A 2013 report by Sharbatoghlie and others shows that as high as 95% of large corporations usually adhere to a code of ethics. Researchers Pitt and Groskaufmanis previously stated that by committing to adhere to a code of ethics, corporations were in all actuality engaging in self-regulation.

 

Code of Ethics in Politics

While most professions and big businesses have adopted various forms of a code of ethics, there are many gaps and omissions when it comes to political conduct. Globally, research shows that the ethical challenges faced by politicians are easily identifiable.

Primarily, politicians need to respect their constituents. Their own interest should never be placed ahead of personal motivations. Since the politicians’ basic problems of ethics are more or less the same, a countrywide uniform code in any country would typically work well in another.

 

Code of Ethics for Code Makers

Since computing professionals now are at the forefront of developing applications that affect all of our lives, they are also the first line of defense against the misuse of technology. For example, computer vision research is now used to develop 3D models of objects and people based on 2D images. However, it was not originally meant for drone applications, nor was it supposed to be used for machine learning in surveillance.

Increasingly, more software is being developed that runs with little or no human input and understanding. In many instances, such software produces analytical results that act as a guide to decision-making, even to the extent of bank loans. Research shows that data-mining predictions of possible loan defaulters showed up biases against people who were looking for longer-term loans or, in some cases, against people who live in particular areas.

Examples of facial recognition software that incorrectly match honest people with those wanted by the law is another issue that happens quite often. Hence, a code of ethics for software professionals should aid in avoiding the creation of systems that potentially oppress people or be misused.

 

More Resources

CFI offers the Capital Markets & Securities Analyst (CMSA)® certification program for those looking to take their careers to the next level. To keep learning and advance your career, the following resources will be helpful:

  • Business Ethics
  • Ethical vs. Legal Standards in Finance
  • Internal Controls
  • Professional

Financial Analyst Certification

Become a certified Financial Modeling and Valuation Analyst (FMVA)® by completing CFI’s online financial modeling classes and training program!