According to the document, which unethical practice discourages investments and increases risks?

Key Points

• Facilitation payment
  • Facilitation payments are often referred to as "grease payments" and are used to expedite or secure the performance of a routine governmental action.
  • These payments are considered unethical because they can lead to a corrupt environment and undermine fair business practices.
  • They discourage investments by creating an unstable business environment where success depends on bribery rather than merit.
  • Such practices increase risks for companies as they may face legal penalties and damage to their reputation.

Additional Information

• Creative accounting
  • Refers to the manipulation of financial statements to present a desired image of a company’s financial health.
  • While it may not always be illegal, it is unethical and can mislead stakeholders.
• Insider trading
  • Involves trading a public company’s stock by individuals with access to non-public, material information about the company.
  • This practice is illegal and severely punished as it violates trust and market integrity.
• Tax avoidance
  • Involves using legal methods to minimize the amount of tax owed.
  • Although legal, aggressive tax avoidance can be seen as unethical, particularly if it involves complex schemes to exploit loopholes in the tax code.