Conflict of Interes
Underwriting and Research in Investment A conflict of interest is defined by a situation wherein financial and other forms of consideration are potentially able to alter professional judgement and objectivity (Columbia University n.d.).
Conflict of Interest
CSR is the acknowledgement of accountability not only for the financial performance of a business but also on the way in which his/her activities affect society as well as the environment. CSR has become extremely important because of the many business scandals that have occurred in the past as well as the recent financial crisis. These events impacted consumer confidence negatively as concerns abound n relation to ethics and governance (Leonard and McAdam 2003). This has resulted in new regulations resulting in changes in the way a number of professional groups conduct their business. If carry out research for investment companies they are paid for this service. The implications of this conflict of interest on the stakeholder’s benefits are that third parties may also use this research information without the knowledge that it was prepared specifically for a particular client. In addition to that they may provide underwriting services. The provision of these services to the same customer represents a conflict of interest as the financial benefits of both are linked. This may affect the underwriter’s objectivity in carrying out research.
Conflict of interest affects credit rating agencies (CRA’s) because they provide consulting services for organisations while at the same time assess their credit rating. Credit rating agencies play a critical role in financial markets by providing credit risk information. This information is made available to issuers of securities, investors and regulators which they then use to make decisions. ...