Financial management is an integral function in the field of business. It involves the planning, organizing, directing, controlling of an organization’s or firm’s financial resources (Davis, Kumiega & Van Vliet, 2012). Proper or sound financial management is known to lead a company to profitability and growth as financial loses are lessened or avoided fully (Hickman, Byrd, & McPherson, 2013). The vital nature of this practice underlines the great responsibility that financial managers in the various institutions organizations where they offer their services. They especially encounter many challenges with some of the prominent ones being the task of maintaining ethical financial integrity and competition in the market on both the domestic and the international front.
In Ethics, Finance, and Automation: A Preliminary Survey of Problems in High Frequency Trading by Michael Davis, Andrew Kumiega, and Ben Van Vliet, the aspect of technology and ethics is analyzed in detail. The recent years have been characterized by numerous information technology (IT) based innovations leading to increased efficiency and accuracy in various human operations and undertakings. The field of finance has benefited greatly from the ICT milestones as financial transactions have been made less complex, faster, and more precise (Hickman et Al. 2013). The introduction of computer-based technologies in financial management has also made it easier for system audits to be conducted thus arresting any cases of irregularities or misappropriation of funds.
One of the core areas of finance, which involves trading has benefited from the automation of the various processes and steps involved. Davis et Al (2012), report in their journal that the integrity of computerized machines that carry out the trading activities is determined by human input. The automated systems rely on trained experts to program both the software and hardware components ensuring effective computations among other activities (Davis et Al, 2012). If personnel with malicious intent guide the programming of the computer systems, then the machines are likely to carry out unethical computations resulting into unscrupulous results and outcomes. Even in the advent of computer-based systems as the core tool of activity in financial trading, ethical conduct and action still relies on the activities of the people involved (Davis et Al, 2012).
Ethical guidelines and considerations in the field of finance are mainly communicated through codes also known as standards of conduct. An example of these codes of ethics is the various Certified Financial Analysts (CFAs) set of guidelines and those meant to guide the professional activities of the Certified Financial Planners (CFPs) (Davis et Al, 2012). The codes of conduct tend to be specific depending on an individual’s area of specialization or professional expertise. In the aforementioned examples for instance, the rules meant to guide the Certified Financial Analysts (CFAs) are different from the ones used to guide the conduct of the Certified Financial Planners (CFP). By following the rules and requirements stipulated in the relevant codes of conduct, the financial managers are able to perform their activities in an ethical manner (Davis et Al, 2012). They also have the role of making sure that the rest of the workforce follows the guidelines with proper punitive measures being administered to any errant employees.
The activities of financial managers are also subject to competition from other firms both locally and internationally (Ayyagari, 2011). Proper response to competition is vital in this case, as it ensures that the company gains an advantage resulting into increased revenues and more returns or profits. In, Firm Innovation in Emerging Markets: The Role of Finance, Governance, and Competition, the authors provide an in-depth analysis of competition in the business world especially in the face of innovation. Meghana Ayyagari, Asli Demirg¡§u¢¬c-Kunt, and Vojislav Maksimovic, who are the researchers behind the aforementioned article, report that the ability to maneuver through a competitive market is one of the key qualities that should be possessed by a financial manager (Davis et Al, 2012). Through strategic positioning, the financial manager is able to tailor the company’s monetary transactions and activities to a model, which outperforms the competition.
Firm Innovation in Emerging Markets: The Role of Finance, Governance, and Competition, discourages the financial manager’s overreliance on operational effectiveness as it usually occurs at the expense of strategic positioning (Ayyagari, 2011). The reason for this is that activities geared towards ensuring operational effectiveness can be mimicked and copied easily by the competitors lessening or eliminating the organization’s competitive advantage. Aptly formulated strategies on the other hand are unique to the organization and not subject to duplication by the competing firms in a certain market of interest (Ayyagari, 2011). A significant competitive edge results from this leading to better returns and productivity and returns for the company both in the short-run and the long-run.
In conclusion, financial management is a core component of any business establishment. Since it deals with the organization of a firm’s monetary resources, special focus should be given to this docket to bring about profitability and revenue growth. The aforementioned challenges encountered by financial managers which are financial integrity and competition should be addressed expertly for the company to be successful. The company’s code of conduct should contain regulations geared towards maintaining financial integrity and the employees should be willing to adhere to them. As far as competition is concerned, proper financial strategies are a prerequisite to a company gaining a competitive edge or advantage.
References
Ayyagari, M., Demirgüç-Kunt, A., & Maksimovic, V. (2011). Firm Innovation in Emerging Markets: The Role of Finance, Governance, and Competition. Journal of Financial and Quantitative Analysis, 1(4), 1545-1580.
Davis, M., Kumiega, A., & Vliet, B. (2012). Ethics, Finance, and Automation: A Preliminary Survey of Problems in High Frequency Trading. Science and Engineering Ethics, 851- 874.
Hickman, K. A., Byrd, J. W., & McPherson, M. (2013). Essentials of Finance. San Diego, CA: Bridgepoint Education Inc.
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