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.

Citation

Sivakumar, N. (2011), "Management of financial market scandals – regulatory and values based approaches", Humanomics, Vol. 27 No. 3, pp. 153-165. https://doi.org/10.1108/08288661111165204