A Company's Code of Ethics sets standards for ethical conduct based on basic principles of integrity, trust, and honesty. It provides personnel with a framework for behavior while conducting the Company's business, as well as guidance for addressing conflicts of interest. In effect, it represents a part of the Company's risk management policies, which are intended to prevent Company representatives from engaging in practices that could harm the Company, its products, or Shareowners.
Reported breaches of ethics in a Company often result in regulatory sanctions, fines, management turnover, and unwanted negative media coverage, all of which can adversely affect the Company's performance.
Investors should determine whether the Company:
A. Aligning their interests to those of the shareowners (for example by being investors themselves).
This might involve some kind of political favor that would not necessarily benefit the long-term interests of the shareholders.