This article takes a novel approach to explaining the causes of unethical behavior in organizations. Instead of explaining the unethical behavior of employees in terms of their bad organization, this article examines how a good organization can lead to employees’ unethical behavior. The main idea is that the more ethical an organization becomes, the higher, in some respects, is the likelihood of unethical behavior. This is due to four threatening forces that become stronger when an organization becomes more ethical. These (...) forces are the upward, downward, backward, and forward forces. Each of these forces is illustrated with two effects and each effect is explained by a specific theory. The effects are the effects of the gold digger, high-jump bar, retreating-cat, forbidden-fruit, cheese slicer, moving-spotlight, repeat-prescription, and keeping-up appearances. This paradox of ethics, when goodness breeds badness, opens new research directions. (shrink)

In response to demand from investors and other stakeholders, companies have increased voluntary disclosure of climate change-related policies and performance. Information intermediaries have correspondingly emerged to provide needed credibility and commensurability of climate disclosures. However, the provision of performance ratings and lax audit capabilities creates opportunities for firms to manipulate those ratings for impression management. This article explains how firms may attain an intermediary’s favorable assessment of climate performance using varied methods of strategic disclosure. Using data from a prominent climate (...) intermediary (CDP, formerly the Carbon Disclosure Project), I find that strategic disclosure is widespread and effective in attaining higher ratings, particularly through disclosure of forward-looking factors, suggesting that ratings may not be an accurate indicator of a firm’s true underlying performance. This article contributes to commensuration and impression management literatures, offers guidance for mechanism design to improve the reliability of intermediated voluntary disclosure, and highlights important areas for future research. (shrink)