Latin American Capital Markets

DEVELOPING CAPITAL MARKETS—ETHICAL ISSUES 421• Developing moral imagination requires a further commitment that is, puttingoneself in other people's shoes or discarding conventional wisdom, like in thecase of discriminated minorities, disadvantaged economic actors, or conflictingvalues.• Honing analytical and critical skills, by examining arguments, evidence, and logicalrelationships, requires exploring common grounds with others and findingreasons to rule out some behaviors and not others.• Finding ways to sort out disagreements includes knowing how to live with theresidues of disagreement that inevitably result from clashes of value orders,religious persuasions, interpretations of facts, and the like.• Affecting our decisions and behaviors and those of others, applied ethics is interestedin contributing to processes and procedures that yield rationally advancedand, above all, practical solutions for the real world.Surely there are costs associated with strictly adhering to moral rules andprocessing relevant decisions through the prism of ethics, but the enforcement ofproperty rights is not cost-free either. In both cases, the overall benefits surely exceedthe costs of making them possible.Thus, moral analysis can be perceived as a meansof putting ethical principles to work in order to find a just, proper; fair, and dynamicequilibrium between self-interest and the interest of others, between "us" and "them"(Hosmer !997).The predictability and rationality that ethical analysis helps introducebecomes a practical tool for policymakers, professional associations, and market agentsto nurture a virtuous circle of trust buildup.A company or industry's voluntary introduction of new layers of accountingcontrol, beyond statutory exigencies and generally accepted accounting principles, withthe aim of proudly showing ergo omnes its commitment to transparency and accountability,is less rare than conventional wisdom has it. For instance, the hotel industryintroduced into its uniform accounting and financial reporting system the notion ofRevPAR, a performance metric of the total guestroom revenue per available room perday that is applicable all over the world.This not only benefits investors and companies,but also other stakeholders, like employees, customers, and suppliers, whose interestsare elevated pah passu by this new, overall wave of increased transparency.TrustThe advanced capital market forces agents to care about their reputation becausesuccessful performance is inextricably linked to the ethical behaviors prescribed in aCopyright © by the Inter-American Development Bank. All rights reserved.For more information visit our website: www.iadb.org/pub