Applying Ethics in Investments Essay Example | Topics and Well Written Essays - 5750 words

Applying Ethics in Investments - Essay Example mmendation 26 4.1 Conclusion 26 4.1 Recommendation 27 Reference 28 Appendix 1 31 Wright Quality Ratings 31 Appendix B: Company Operations Information 32 Mayne Pharma Group Limited 32 Singapore Telecommunications (SGT) 32 Renaissance Uranium (RNU) 33 List of Tables Table 1: Environmental qualification criteria employed for screening of companies for investment 17 Table 2: Evaluation of environmental credentials 19 Table 3: Evaluation of Corporate Governance Credentials 21 Table 4: Evaluation on the basis of contextual factors 22 Table 5: Evaluation on the basis of financial performance and prospects 25 Tables of Figures Figure 1: Adapted form source: Morningstar, 2011. Equity Research Methodology. [Online] Morningstar (January 27, 2011) Available at: http://news.morningstar.com/pdfs/Equity_Research_Methodology_102308.pdf [Accessed 14 September 2011]. 12 Figure 2: Research process adopted for the study 14 Figure 3: Sub-factors considered under factor financial performance and prospects 27 Section 1: Executive Summary This study was undertaken to choose the most worthy company among three companies namely, Mayne Pharma Limited, Singapore Telecommunications, Renaissance Uranium, with the aim to invest $500,000 on a long-term basis. Four main criteria were considered to evaluate the companies’ performance. These were (1) financial performance and prospects, (2) corporate governance performance, (3) environmental protection credentials, (4) Contextual factors (e.g. legal/political issues, global or regional economic pressures, etc.). An extensive review of existing literatures on the subject was undertaken to identify suitable comparison variables on the basis of which the companies were to be evaluated. A total of 24 sub-criteria criteria were listed under the financial... Four main criteria were considered to evaluate the companies’ performance. These were (1) financial performance and prospects, (2) corporate governance performance, (3) environmental protection credentials, (4) Contextual factors (e.g. legal/political issues, global or regional economic pressures, etc.). An extensive review of existing literatures on the subject was undertaken to identify suitable comparison variables on the basis of which the companies were to be evaluated. A total of 24 sub-criteria criteria were listed under the financial performance and prospects; twelve sub-criteria were identified under corporate governance; seven sub-criteria under environmental protection; while the contextual factors consisted four sub-criteria. On the basis of the four criteria and the variables contained in the sub-criteria, a scoring method was developed and the companies’ performance was compared. The findings revealed that Singapore Telecommunications is most worthy compan y. Accordingly, the company was recommended for long-term investment. As Beal et al (2005) brought out in their paper Why do we invest ethically? Over the last two decades, one particular type of behaviour is the desire to invest ethically† (Beal et al., 2005). The authors add that â€Å"based on traditional finance theory and the ethical investment literature, there are three potential reasons why people may invest some or all of their funds ethically: (1) for superior financial returns; (2) for non-wealth returns; and (3) to contribute to social change (Beal et al., 2005). These motivations also inspired this report and prompted that investing should not only be made for shareholders’ wealth maximisation but also for sustainable development.