Management of financial market scandals – regulatory and values based approaches

Abstract

Purpose -The paper aims to discuss the management of financial market scandals using two different approaches -regulatory and values-based. Design/methodology/approach -The paper discusses the motivations behind financial scandals to occur and then explains in detail both the approaches. The paper first presents the elements of the regulatory approach. Using the teachings of Bhagavan Sri Sathya Sai Baba, the values-based approach are delineated. The paper also compares the two approaches and identifies their respective utilities. Findings -While both the regulatory and values based approaches have their own utilities; stressing the values-based approach helps with preventing financial scandals on a sustainable basis. Practical implications -The practical implication is that it is necessary to stress the evocation of human values among investors and capital market intermediaries so that scandals can be avoided. Social implications -The social implication of the paper is that values evocation is very important to tackle the behavioural motivations behind financial scandals. Unless values are evoked, the root causes of financial scandals will not be removed. In such cases, regulation will have only a limited effect. Originality/value -The paper uses the philosophy and teachings of Bhagavan Sri Sathya Sai Baba to develop value guidelines to prevent financial scandals.

Role of Regulatory Governance in Financial Stability: A Comparison of High and Low Income Countries

“…Many economists propagate free market approach everywhere but the financial sector because banks have to judge the creditworthiness of firms in the process of loan sanctions. Sivakumar (2011) suggested that for financial system integrity banks have to meet specific recommendations, prerequisite, and financial regulations boundaries. The regulators usually grant an appeal right to banks to maintain fairness in operations.…”

On the relationship between brand scandal and consumer attitudes: A literature review and research agenda

“…Previous studies have examined scandals in the context of corporate scandals (Grebe, 2013), media scandals (Lloyd et al., 2014), celebrity scandals (Hood, 2012; Knittel & Stango, 2014), sports scandals (Connor & Mazanov, 2010; Osborne et al., 2016; Sato et al., 2020), financial market scandals (Sivakumar, 2011), political scandals, scandals related to intellectual and development disabilities (Halladay & Harrington, 2015), real products’ impact on high brand equity brand (Thaler et al., 2018) and from the crisis perspective (Bowen et al., 2018). Though the areas mentioned above have been explored in detail, there are potential gaps in the literature in the context of brand scandal and its impact on consumer attitudes.…”