The Cost Of Unethical Behavior

Finance textbooks do not generally spend a lot of time on ethics. This is because in finance, we generally argue that if the market believes that certain behavior is unethical, the company is punished financially, which means management is not maximizing the company value. This week, Deutsche Bank was fined $2.5 billion for its role in fixing LIBOR and Euribor, and Petrobas was forced to write-off $5 billion due to the corruption scandal that has entangled the company.