Controversial Activity about Short selling been Ethical

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Short selling in the stock markets is the sale of stocks not owned by the seller. Money is made when the stock drops in value instead of increasing in value, thus making it such a controversial activity. Many have argued that short selling have large detrimental effects to the stock market, however it does also provide benefits to the society. By applying ethical models of reasoning and determining if NRFs are acting in the conflict of interest, we will be able to determine if short selling conducted by NRFs is indeed ethical and whether it should be allowed to be conducted.

Ethical Model of Reasoning

Consequentialism

Consequentialism is based on the principle of maximizing utility, focusing on the consequences of the action. As long as the positive consequences outweigh the negative consequences, it is considered as ethical (Brooks & Dunn, 2011). The strength of consequentialism is that it can be applied systematically. Unfortunately, it is difficult to apply because it is difficult to determine and measure all the consequences bore by others. Moreover, there is no definite guideline to who are the stakeholders that should be considered when applying the model (Hart, n.d).

Deontology

Deontology is a “duty” based ethics. In order to be ethical, one must take proper actions with good intentions resulting in positive consequences (Brooks & Dunn, 2011). The appeal of Deontology is that it provides us with rules that are applicable to all situations as rules. On the other hand, it is rigid and unable to be fair in different situations (Hovland & Wolburg, 2010).

Justice Ethical Approach

Justice ethical approach is where everyone should be treated equally regardless of their social standing and background (Velasquez, Andre, Sha...

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