INSIDER TRADING FROM THE PERSPECTIVES OF TWO ETHICAL THEORIES: UTILITARIANISM AND KANT’S APPROACH

Year 2010, Volume: 2 Issue: 1, 1 - 8, 01.06.2010

Arzu Ozsozgun Emel Ozarslan Halil Emre Akbas

Abstract

Utilitarianism is a general term for any view that holds that actions and policies should be
evaluated on the basis of the benefits and costs they will impose on society but in the respect of
Kant’s categorical imperative approach, intention is more important than result while we behave
in an action. The purpose of the study is to investigate the insider trading which is about buying or
selling of securities on the basis of material, non public information, with these two theories as
utilitarian principles and Kant’s approach from the perspectives of Business Administration
Students. The data was collected by different scenarios which reflect the insider trading in the
stock market. The results show that insider trading should be analyzing according to the condition
of this perspectives in order to find out that is ethical or unethical.

Keywords

Insider trading, business ethics

References

• Ausubel, Lawrance M. (1990), “Insider Trading In A Rational Expectations Economy”, The American Economic Review, Vol. 80, No. 5 pp. 1022-1041.
• Bernardo, Antonio (2001), “Contractual Restrictions On Insider Trading: A Welfare Analysis”, Economic Theory, 18, pp. 7-35.
• Bettis, J. Carr, William A. Duncan And W. Ken Harmon (1998), “The Effectiveness Of Insider
• Trading Regulations”, Journal of Applied Business Research, Fall, Vol. 14, No, 4, pp, 53-70. Bhattacharya, Utpal and Hazem Daouk (2002), “The World Price Of Insider Trading”, The Journal Of Finance, Vol. LVII, No. 1, pp. 75-108.
• Curtis, Mary B. and Julius Mwangi (2007), “Insider Trading from the Internal Auditor’s
• Perspective”, http://www.theiia.org/research/research-reports/chapter-sponsored-research-list/, Accessed 20.4.2010].
• Doffou, Ako (2003), “Insider Trading: A Review of Theory and Empirical Work”, Journal of
• Accounting and Finance Research, Vol. 11, No 1, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1028898, [Accessed 21.04.2010]
• Du, Julan and Shang-Jin Wei (2004), “Does Insider Trading Raise Market Volatility?”, The Economic Journal, 114, pp. 916-942.
• Elliott, John, Dale Morse and Gordon Richardson (1984), “The Association between Insider
• Trading and Information Announcements”, The RAND Journal of Economics, Vol. 15, No. 4, pp. 536. Engelen Peter-Jan and Luc Van Liedekerke (2007), “The Ethics of Insider Trading Revisited”,
• Journal of Business Ethics, Vol. 74, No 4, pp.497-507. Knights, David and Majella O’Leary, (2006), ‘‘Leadership, Ethics and Responsibility to the Other’’, Journal of Business Ethic, Vol. 67, No 2, pp.125-137.
• Lekkas, Panagiotis (1998), “Insider Trading and the Greek Stock Market”, A European Review, Vol. 7 , No 4, pp. 193-199.
• Ma, Yulong and Huey-Lian Sun (1998), “Where Should the Line Be Drawn on Insider Trading
• Ethics?”, Journal of Business Ethics, Vol. 17, No 1, pp. 67-75. McGee, Robert W. (2008), “Applying Ethics to Insider Trading”, Journal of Business Ethics, Vol. , No 2, pp. 205-217.
• McGee, Robert W. (2009), “Analyzing Insider Trading from the Perspectives of Utilitarian Ethics and Rights Theory”, Journal of Business Ethics, Vol. 91, No 1, pp. 65-82.
• O’Hara, Phillip Anthony (2001), “Insider Trading In Financial Markets: Legality, Ethics,
• Efficiency”, International Journal of Social Economics, Vol. 28, No 10/11/12, pp. 1046-1062.
• Strudler, Alan and Eric W. Orts (1999), “Moral Principle in the Law of Insider Trading”, Texas Law Review, Vol. 78, pp. 375-438.
• Szockyj, Elizabeth and Gilbert Geis (2002), “Insider Trading Patterns And Analysis”, Journal of
• Criminal Justice, Vol. 30, No 4, pp. 273-286. Tezcanlı, Meral Varış (1996), Insider Trading and Market Manipulation, Istanbul:IMKB.
• Velasquez, Manuel G. (2002), Business Ethics Concept and Cases, USA, Fifth Edition, Printice Hall.