Why do some organizations suffer more than others in the wake of an industry scandal? Although ex-ante greater opportunistic behavior of organizations is one factor, we argue that ex-post greater targeting of organizations is another important factor. Using the context of microfinance organizations (MFOs), we examine why the financial sustainability of for-profit and non-profit organizations may be heterogeneously affected following a scandal. Leveraging the 2010 Indian microfinance scandal as our research setting and analyzing longitudinal data, we find a substantial (...) decline in the financial sustainability of Indian MFOs relative to their counterparts within the rest of South Asia. Compared to Indian non-profit MFOs, Indian for-profit MFOs suffered substantially more. Intriguingly, these results hold not only in the full sample, but also in the matched sample of comparable for-profit and non-profit MFOs. Further analysis reveals that the adverse impact on for-profit MFOs was much bigger in the scandal’s epicenter. Our findings suggest that some organizations may suffer more than others not only due to their engagement in actual malfeasance but also due to their greater targeting by the social control agents. We discuss the implications of this study for social enterprise managers and policymakers. (shrink)

Given the importance of data safety for psychology, the present study investigated the influence of data leaking scandal on campus customers’ financial consumption behaviors at intelligent tourism platforms in China, and explored the roles that individual characteristics play in this process by focusing on a set of participants from colleges. Data were collected through sending out an online questionnaire, where respondents were asked to finish a series of questions about their background information, their trust, future consuming intention, and defensive (...) behaviors toward intelligent platforms. After they finished these questions, a short description about an online tourism platform leaking customers’ personal information was presented to the respondents, following which they were asked to report about their future consuming intentions and defensive behaviors again. In total, 236 participants of college students and teachers were recruited. Paired samples mean comparison showed that after the stimulus was presented, the respondents had a significant decrease in future financial consumption intention, and a significant increase in defensive behaviors toward online tourism platforms due to risks perceived. Multiple regression analysis was conducted subsequently to investigate individual characteristics that may account for part of the decrease in consuming intention. Results showed that, customers with higher level of trust and monthly income, as well as older customers, tend to experience higher level of decrease in consuming intention, and increase in defensive behaviors. These findings highlighted the importance of online tourism platforms guaranteeing data security of their customers. (shrink)

In this topical book, Boudewijn de Bruin examines the ethical 'blind spots' that lay at the heart of the global financial crisis. He argues that the most important moral problem in finance is not the 'greed is good' culture, but rather the epistemic shortcomings of bankers, clients, rating agencies and regulators. Drawing on insights from economics, psychology and philosophy, de Bruin develops a novel theory of epistemic virtue and applies it to racist and sexist lending practices, subprime mortgages, CEO (...) hubris, the Madoff scandal, professionalism in accountancy and regulatory outsourcing of epistemic responsibility. With its multidisciplinary reach, Ethics and the Global Financial Crisis will appeal to scholars working in philosophy, business ethics, economics, psychology and the sociology of finance. The many concrete examples and case studies mean that this book will also prove useful to policy-makers and regulators. (shrink)

The rising tide of corporate scandals and audit failures has shocked the public, and the integrity of auditors is being increasingly questioned. It is crucial for auditors and regulators to understand the main causes of audit failure and devise preventive measures accordingly. This study analyzes enforcement actions issued by the China Securities Regulatory Commission against auditors in respect of fraudulent financial reporting committed by listed companies in China. We find that auditors are more likely to be sanctioned by (...) the regulators for failing to detect and report material misstatement frauds rather than disclosure frauds. Further analysis of the material misstatements indicates that auditors are more likely to be sanctioned for failing to detect and report revenue-related frauds rather than assets-related frauds. In sum, our results suggest that regulators believe auditors have the responsibility to detect and report frauds that are egregious, transaction-based, and related to accounting earnings. The results contribute to our knowledge of auditors’ responsibilities for detecting frauds as perceived by regulators. (shrink)

This paper presents a comparative analysis of three American and three European corporate failures. The first part of the analysis is based on a theoretical framework including six areas of ethical climate; tone at the top; bubble economy and market pressure; fraudulent financial reporting; accountability, control, auditing, and governance; and management compensation. The second and third parts consider the analysis of these cases from fraud perspective and in terms of firm-specific characteristics and environmental context. The research analyses shed light (...) on the fact that, despite major differences between Europe and U.S. in terms of political institutions, laws and regulations as well as managerial practices, there are significant similarities between six groups. The analysis also demonstrates that, the ethical dilemma has been coupled with ineffective boards, inefficient corporate governance and control mechanisms, distorted incentive schemes, accounting irregularities, failure of auditors, dominant CEOs, dysfunctional management behavior and the lack of a sound ethical tone at the top. Significant similarities were also observed in the analysis from the fraud triangle perspective. However, there are several major differences between the six corporate failure cases particularly with regard to ownership structure, coverage in media, and legal, regulatory and governance frameworks. This research study may have several academic and practical contributions, particularly because of multidisciplinary, international features, and comparative analyses used in the paper. (shrink)

The last years have seen a surge of scandals in financial intermediation. This article argues that the agency structure inherent to most forms of financial intermediation gives rise to conflicts of interest. Though this does not excuse scandalous behavior it points out market imperfections. There are four types of conflicts of interest: personal-individual, personal-organizational, impersonal-individual, and finally, impersonal-organizational conflicts. Analyzing recent scandals we find that all four types of conflicts of interest prevail in financial intermediation.

The enduring failure of financial institutions to identify and deal with risk events continues to have serious repercussions, whether in the form of small but significant losses or major and potentially far-reaching scandals. Using a mixed-methods approach that combines an innovative version of the classic dictator game to inform prosocial tendencies with the survey-based Theory of Planned Behaviour, we examine the risk-escalation behaviour of individuals within a large financial institution. We discover evidence of purely selfish behaviour that (...) explains the lack significance in pressure to adhere to the Subjective Norms of colleagues around intention to report risks. A finding that has potentially important implications for efforts to instil a high-error management climate and incentivise risk reporting within organisations where risk, if ignored or unchecked, could ultimately have consequences that extend far beyond the institutions themselves. (shrink)

For much of the last 50 years, a key platform animating public sector reform in Canada and elsewhere has been that efficiency and effectiveness can be achieved by adapting private sector financial management methods and practices. We argue that the recent re-establishment of the Office of the Comptroller General (OCG) of Canada represents a key element of a program of strengthening financial accountability that has emerged within the Canadian Federal Government. Although this program is longstanding and is associated (...) Canada’s implementation of new public management initiatives, it has recently drawn particular sustenance from the sponsorship scandal in Canada. We demonstrate that the reincarnated OCG, re-established amid a rhetoric of “modernization” and of “strengthening” accountability, has a wide-ranging mandate to enhance financial and audit controls, create financial standards, nurture professional development, and oversee government spending. We explore some of the consequences of this development and of the broader financial accountability mechanisms introduced in response to the Sponsorship scandal within the Canadian public sector. (shrink)

This paper addresses the impact of the unethical business conduct of a few individuals that shook the financial market in 1986. Specifically, in the study undertaken for this paper, the wealth status of the shareholders of securities firms was examined in relation to the public disclosure of the insider-trading scandals involving Dennis Levine, Ivan Boesky, and their confederates. It was hypothesized that the expected market-adjusted stock returns for the securities firms would be negative as a result of the (...) scandals. The findings of the study supported the hypothesis. (shrink)

Recurrent scandals in business ethics demonstrate that work is, on occasion, unambiguously unethical. It is not clear, however, exactly how the concept of ‘meaningful work’ can be applied to such work, and whether, for example, work can be both unethical and meaningful. This article explores three different conceptualisations of meaningful work: where meaningful work is considered to be subjective, primarily subjective but with objective constraints or primarily objective (adopting Alasdair MacIntyre's neo-Aristotelian framework). These competing conceptualisations are examined in relation (...) to the ethical failures in the Australian financial advice industry. From 2009, a range of parliamentary inquiries, including a Royal Commission, documented significant ethical failures at both individual and institutional levels across the industry, which caused substantial hardship to tens of thousands of clients. Among the subsequent reforms was a drive towards the professionalisation of financial advice through enhanced educational standards, a code of ethics and the development of a professional identity. This case demonstrates the different ways in which the conceptualisations of meaningful work can be applied. However, Alasdair MacIntyre's scheme of practices, institutions, internal and external goods is presented as a preferred conceptualisation of the case, accommodating considerations of both ethics and meaningful work and contributing towards a theory of good work in general. (shrink)

The globalizations of capital markets in the last 20 years has led to a historic degree of financial integration in the world. It is clear, however, that globalization is not conducive to a complete homogeneity of financial markets and institutions. Among others, one element of diversity is the importance of the impact of corruption in emerging countries. Corruption decreases the credibility of financial institutions and markets. Scandals and unethical behavior in financial institutions erode confidence in (...) such firms. Relying on neoinstitutional literature, this article focuses on the link between corruption and organizational isomorphism in financial institutions in emerging countries. Therefore, our aim is to examine the institutional reasons for corruption in financial institutions in emerging countries. Our structural equation model is based on empirical research in financial institutions in emerging countries. A questionnaire was administrated to 70 top executives of financial institutions in 18 different emerging countries. (shrink)

Using data on shareholder-initiated class action lawsuits in the US, I investigate the corporate scandals of US-listed foreign firms. The shareholders of scandal firms suffer considerable loss in both the short term and the long term. I document that firms domiciled in countries with weak institutions are more likely to be embroiled in corporate scandals, but such a relation can be moderated by the presence of Big 4 auditors. Investors automatically adjust for undiscovered misconduct when valuing the stocks (...) of non-scandal firms. Investors rely on the audit quality to form their expectations about the severity of undiscovered misconduct, and thus impose less negative spillovers on firms with Big 4 auditors, especially when the firms are from countries with weak institutions. Taken together, my results suggest that listing on US exchanges does not fully compensate for weak local institutions; voluntarily bonding to a more stringent audit process has an incremental effect on protecting shareholder interests and enhances the confidence of investors in firms’ financial integrity. (shrink)

This article examines the proposition that a major cause of the major financial accounting scandals that received much publicity around the world was unethical leadership in the companies and compares the role of unethical leaders in a variety of scenarios. Through the use of computer simulation models, it shows how a combination of CEO's narcissism, financial incentive, shareholders' expectations and subordinate silence as well as CEO's dishonesty can do much to explain some of the findings highlighted in (...) recent high profile financial accounting scandals. Furthermore, it shows that the nature and impact of ethical leadership depends greatly on the institutional setting and can be expected to vary greatly by country and culture. In certain circumstances ethical leadership can have either a negligible or even opposite effect to that expected. (shrink)

This Article discusses why a “corporate governance movement” that commenced in the United States in the 1970s became an entrenched feature of American capitalism and describes how the chronology differed in a potentially crucial way for banks. The Article explains corporate governance’s emergence and staying power by reference to changing market conditions and a deregulation trend that provided executives with unprecedented managerial discretion as the twentieth century drew to a close. With banking the historical pattern paralleled general trends in large (...) measure. Still, while the “imperial” CEO who achieved prominence in the 1980s became outmoded for the most part after corporate scandals at the start of the 2000s, this was not the case with large financial companies. The continued boldness of “star” CEOs in the financial services industry plausibly contributed to the market turmoil of 2008, but the financial crisis emphatically ended the corporate governance “free pass” banks had enjoyed. (shrink)

Over the last decade, scandals within the UK Financial Service sector have impacted their legitimacy and raised questions whether a compliance culture exists or not. Several institutional changes at the regulatory and normative levels have targeted stakeholders’ concerns regarding compliance culture and led to changes in the legitimation process. This paper attempts to address a gap in the literature by asking the following question: How is the UK financial institutions’ compliance culture shaped by the institutional environment and (...) changing legitimacy claims? Towards achieving this objective, the paper draws on the institutional theory and pays attention to the various configurations of the legitimacy notion :451–478; 2017). The paper utilises a longitudinal interpretive design and undertakes a qualitative content analysis of fines issued by the UK regulator and the communicated response of violating firms as well as non-sanctioned firms. Our findings indicate that there is a cyclical ‘evolutionary compliance’ rather than the more widely recognised state of ‘compliance culture’. This culture is fuelled by interchangeable isomorphic forces where the majority of violating firms are seen to issue similar responses to the regulators sanction to maintain their reputation and legitimacy in the market. Notably, legitimacy is now defined within an interactive process between the regulator and firms rather than being static and achieved by ticking the box. (shrink)

Traditional corporate finance endorses the principle of stockholder wealth maximization as the purpose of business. In light of recent scandals and legislation, businesses are increasingly expected to use financial resources in a manner which benefits society and not just the owners of the firm. This imputation of a corporate soul will necessarily reduce investor returns, which has at least two major financial implications for the firm and the economy. The first is that it may cause investors to (...) change their required rates of return and thereby change the amount of capital available to firms, and the economy. The second is that it may implicitly replace equity with debt in the capital structure of firms, with all that implies for financing and corporate governance. The purpose of this article is to examine these implications and evaluate their sometimes counterintuitive consequences. (shrink)

This study examines a sample of three editions of 19 financial accounting and auditing textbooks (n = 57) to explore the state of accounting educational content through the coverage of five key topics (ethics, professional judgment, governance, corporate social responsibility, and fraud) and 16 accounting scandals/troubled corporations. The study method is descriptive and uses independent sample t tests to identify significant differences over time and between countries. The major findings are fourfold. First, some topics' coverage and/or scandals (...) exist in most of the sample's books based on their indexes. However, the page coverage for these topics/scandals is not overwhelming when compared to the number of pages in these texts. Second, the scandals/troubled corporations' page coverage increased between the earliest and the later editions as did a depth of coverage trend measure. Third, U.S. texts in the sample contained significantly more pages devoted to these topics and scandals than the non-adapted Canadian sample texts. Finally, and as expected, the sampled auditing texts contain significantly more pages devoted to these topics and scandals compared to the other financial accounting texts in the sample. Educators and textbook authors interested in the future of business and accounting education will find this study of interest. If reminding accounting students of the ethical dilemmas they will face in their future careers is important, then this study indicates places where coverage in this sample of texts may be enhanced either through the use of standalone supplementary ethics texts or instructor introduced sources. (shrink)

Moral and financial scandals emerging in recent years around the world have created the momentum for reconsidering the role of virtuousness in organizational settings. This empirical study seeks to contribute toward maintaining this momentum. We answer to researchers’ suggestions that the exploratory study carried out by Cameron et al. :766–790, 2004 ), which related organizational virtuousness and performance, must be pursued employing their measure of OV in other contexts and in relation to other outcomes :928–958, 2007 ). Two (...) hundred and sixteen employees reported their perceptions of OV and their affective well-being at work, their supervisors reporting their organizational citizenship behaviors. The main finding is that the perceptions of OV predict some OCB both directly and through the mediating role of AWB. The evidence suggests that OV is worthy of a higher status in the business and organizational psychology literatures. (shrink)

Recent years have featured a spate of regulatory action pertaining to the development and/or disclosure of corporate governance structures in response to financial scandals resulting in part from governance failures. During the same period, corporate governance activists and institutional investors increasingly have called for increased voluntary governance disclosure. Despite this attention, there have been relatively few comprehensive studies of governance disclosure practices and response to the regulation. In this study, we examine a sample of 50 U.S. firms and (...) their public disclosure packages from 2004. We find a high degree of variability in the presentation and reporting format choices for many elements of the governance structure. This variability includes several items for which disclosure is mandated by regulators or legislative action. In particular, smaller firms offer fewer disclosures pertaining to independence, board selection procedures, and oversight of management (including whistleblowing procedures). There are also trends associated with board characteristics: boards that are less independent offer fewer disclosures of independence and management oversight matters. Moreover, large firms provide more disclosures of independence standards, board selection procedures, audit committee matters, management control systems, other committee matters, and whistleblowing procedures but do not appear to have a strictly superior information environment when compared to smaller firms. The findings raise questions about compliance with regulatory requirements and the degree to which conflicts of interest between managers and directors are being controlled. While there have been notable improvements in the information environment of governance disclosures, there remain structural issues that may possess negative ramifications for stakeholders. (shrink)

Scandals in companies such as Enron have been a source of great concern in the last decade. The events that led to a global financial crisis in 2008 have heightened this concern. How does one account for executive behaviors that led to such a crisis? This article argues that a conjunction of motive, means, and opportunity creates ‘an ethical hazard’ making questionable executive decisions more probable. It then suggests that corporate unethical behavior can be minimized by creating a (...) process to identify and remove such ethical hazards, and by appointing an ‘ethical hazards marshal.’. (shrink)

Committing financial fraud is a serious breach of business ethics. However, there are few large scale studies of financial fraud, which involve ethical considerations. In this study, we investigate the pervasive financial scandals, which by the end of 2012 involved more than a third of the US-listed Chinese companies. Based on a sample of 262 US-listed Chinese companies, we analyze factors that differentiate between firms that commit financial fraud and those that do not. We find (...) that firms more predisposed to unethical behavior, due to their low regional social trust in the home country and low respect for regulations and laws as proxied by political connections, are more likely to commit accounting and financial fraud. They take advantage of low hurdles for listing via reverse mergers and avoid third-party monitoring through poor governance and auditors. Finally, we find evidence, after these scandals, of non-fraudulent firms differentiating themselves from the fraudulent firms by sending costly signals such as insiders purchasing shares, increasing dividends, and going private. (shrink)

The Sarbanes–Oxley Act of 2002 requires audit committees of public companies’ boards of directors to install an anonymous reporting channel to assist in deterring and detecting accounting fraud and control weaknesses. While it is generally accepted that the availability of such a reporting channel may reduce the reporting cost of the observer of a questionable act, there is concern that the addition of such a channel may decrease the overall effectiveness compared to a system employing only non-anonymous reporting options. The (...) rationale underlying this concern involves the would-be reporter’s likelihood of reporting, the seriousness with which the organization treats an anonymous report, and the organization’s ability to thoroughly follow-up the report. Thus, we explore the extent to which the availability of an anonymous reporting channel influences intended use of non-anonymous reporting channels. Further, in response to Sarbanes–Oxley and the environment of financial scandals that led to its passage, many firms are strengthening their internal audit departments, and providing them with greater independence from upper management’s direct control. Accordingly, our examination tests whether the intended use of the internal audit department as an internal reporting channel is greater when the internal audit department is of “high” versus “low” quality. Finally, the study investigates intended reporting behavior across three different cases (e.g., settings). Results show that the existence of an anonymous channel does reduce the likelihood of reporting to non-anonymous channels, that generally the internal audit department quality does not affect reporting to non-anonymous channels, and that case-setting affects the type of channel to be used. Implications from the study are discussed. (shrink)

Contemporary law and public policy often treat human beings as selfish creatures who respond only to punishments and rewards. Yet every day we behave unselfishly--few of us mug the elderly or steal the paper from our neighbor's yard, and many of us go out of our way to help strangers. We nevertheless overlook our own good behavior and fixate on the bad things people do and how we can stop them. In this pathbreaking book, acclaimed law and economics scholar Lynn (...) Stout argues that this focus neglects the crucial role our better impulses could play in society. Rather than lean on the power of greed to shape laws and human behavior, Stout contends that we should rely on the force of conscience. Stout makes the compelling case that conscience is neither a rare nor quirky phenomenon, but a vital force woven into our daily lives. Drawing from social psychology, behavioral economics, and evolutionary biology, Stout demonstrates how social cues--instructions from authorities, ideas about others' selfishness and unselfishness, and beliefs about benefits to others--have a powerful role in triggering unselfish behavior. Stout illustrates how our legal system can use these social cues to craft better laws that encourage more unselfish, ethical behavior in many realms, including politics and business. Stout also shows how our current emphasis on self-interest and incentives may have contributed to the catastrophic political missteps and financial scandals of recent memory by encouraging corrupt and selfish actions, and undermining society's collective moral compass. This book proves that if we care about effective laws and civilized society, the powers of conscience are simply too important for us to ignore. (shrink)

Ethics and Finance: An Introduction provides a comprehensive and accessible introduction to the ethical issues raised by modern finance. Drawing carefully on ethical theory and with frequent use of case studies, it includes an analysis of the global financial system and its regulation and control, as well as a detailed analysis of the financial crisis. Chapters on specific areas of finance practice cover all the major financial scandals of recent times, from mis-selling to market manipulation and (...) from insider trading to bankers' bonuses, as well as much more positive developments. From micro finance to derivatives trading, the book provides a careful and balanced treatment designed to help finance students and practitioners approach this sensitive topic in a thoughtful and constructive way. No prior knowledge of ethics or finance is required, and the book will be invaluable to students, finance teachers, practitioners and regulators. (shrink)

The current economic crisis, unsustainable growth, and financial scandals invite reflection on the role of universities in professional training, particularly those who have to manage businesses. This study analyzes the main factors that might determine the extent to which Spanish organizational management educators use corporate social responsibility (CSR) or business ethics stand-alone subjects to equip students with alternative views on business. A web content analysis and non-parametric mean comparison statistics of the curricula of undergraduate degrees in all universities (...) in Spain were conducted. The main conclusion of this paper is related to the Bologna effect in Spanish universities. Comparing our results with prior research in this matter, it is demonstrated that the main reason that explains the increase of CSR and ethical education in Spain is the Bologna process and its adaptation to the European Higher Education Area. Also, private universities in Spain are more likely to require an ethics course than public universities. Other factors, such as size, political orientation, or related to CSR chairs are not statistically explanatory of CSR and ethical education. (shrink)

Accountants are neither devoid of ethical dilemmas nor are they immune from financial scandals. In order to improve the credibility of the profession, it is important to study the personal values that qualified and trainee accountants consider important. Using Maccoby's instrument, which measures ‘head’ and ‘heart’ values, qualified accountants (chartered and certified) and trainee accountants were surveyed for the first time in a European Union member country (Cyprus) to ascertain their character ethical traits/personal values. Accountants were found to (...) value ‘head’ more than ‘heart’ traits and there were no gender differences. For male respondents, age and years of professional experience were significant correlates of the importance attributed to head traits, while having religious beliefs was associated with valuing heart traits more. Finally, the implications for accounting education and the professional bodies are considered. (shrink)

Accountants are neither devoid of ethical dilemmas nor are they immune from financial scandals. In order to improve the credibility of the profession, it is important to study the personal values that qualified and trainee accountants consider important. Using Maccoby's instrument, which measures ‘head’ and ‘heart’ values, qualified accountants (chartered and certified) and trainee accountants were surveyed for the first time in a European Union member country (Cyprus) to ascertain their character ethical traits/personal values. Accountants were found to (...) value ‘head’ more than ‘heart’ traits and there were no gender differences. For male respondents, age and years of professional experience were significant correlates of the importance attributed to head traits, while having religious beliefs was associated with valuing heart traits more. Finally, the implications for accounting education and the professional bodies are considered. (shrink)

Recent communication and discussion concerning corporate governance, CSR, codes of conduct and other ethical policies have restored the tarnished reputation of the business world which followed a spate of financial scandals. However, one also notices an increased dissonance between the attractive messages emanating from business leaders and the reality. This disconnection between the ‘CSR rhetoric and corporate governance ethics’ and the practical reality experienced within companies leads to hypocrisy. The reality seems too often in contradiction with the idealistic (...) character of corporate communication.In our paper, we analyse the impact of communication and perception on the image and reputation of the company. We survey the characteristics of the media, which include lack of nuance and the tendency to generalization, amplification and reduction. We confront the hypocrisy in the contradiction between words and deeds, and briefly analyse the reasons for this disconnection between message and reality. The continuum from idealism to hypocrisy to position a company in function of the degree of congruence or dissonance between communication and reality forms the basis for a sincerity index. (shrink)

The article sets out to explore the lessons that can be drawn from the selfless and integrity-driven leadership offered by some pioneer post-independent Kenyan leaders such as Karubiu wa Munyi. With more financial scandals increasing in the public domains, as in the case where over 15 mega corruption scandals remained unaccounted for, by 2018, the need to draw some lessons from the likes of wa Munyi becomes an important matter worth consideration in the 21st century. As we (...) seek to demolish both colonial mentality and neo-colonialism in the 21st century, there is a need to reconstruct the memories of some of our key actors in our African societies, as we seek to rebuild our respective contexts. Having lived under deadly and complicated theo-historical times, but eventually overcame hunger and famine, war, colonial bombs and general poverty, the article hypothesises, he stands out on a pedestal and remains a critical reflective case for masses of people who are walking through the valleys and shadows of death in Africa and beyond. In its methodology, the article develops mainly from the researchers’ interviews with wa Munyi who is eventually chronicled, as it seeks to ascertain whether there are lessons to draw from his ‘philanthropic’ and integrity-driven leadership. Was the virtue-driven leadership of Karubiu wa Munyi a by-product of Africa’s Ubuntu [caring for the other] cultural heritage and the evangelical Anglican Christianity that settled in his locality since 1912? And has the society lost its cultural morality and the virtue-leaning evangelical Christianity that was ushered in by the Church Mission Society at the beginning of the 20th century? In this article, Gitugi kia bururi [the critical cornerstone] – the casual description of wa Munyi – symbolises the ideal leaders who remain at peace with themselves and the general society even after retiring from active public duties; as their respective consciences are above board. Africa has to take lessons from such selfless leaders. The materials in this article are gathered through interviews with wa Munyi and other people who are connected to issues under consideration. A review of relevant literature has also been done.Contribution: The article adds to the growing knowledge by its originality; a phenomenon where a little-known civic leader is used as a lens through which we can understand the modern day Africa. Has the continent that sought independence from the colonialists who came after the Berlin Conference of 15 November 1884 to 26 February 1885 recolonising itself through neo-colonialism and corrupt practices of unimaginable proportions? The article is relevant to the HTS Journal and the world of scholarship as it shows God’s works in history, as it confirms that a people who walk through the desolate valleys and shadows of death, and are starring at the total annihilation, do also have a future. (shrink)

Recent examples of corporate, national and international ethical and financial scandals and crises have created a need to bolster the ethical acumen of managers through business education imperatives. This topical book forms an important part of the debate on the development of ethical business leaders and provides empirically grounded, theoretical insights for rethinking business curricula requisite for understanding and meaningfully confronting an ethical vacuum that sometimes exists in business. Management Education for Integrity explains how curricula should be streamlined (...) and rejuvenated to ensure a high level of integrity in management education, providing numerous examples of new tools, teaching methods, integrity sensitization and development exercises and ethical management education assessment approaches. Chapters include: fostering integrity in business curricula; a critique of ethics education in management; measuring best practices in management education for integrity capacity; encouraging moral engagement in business ethics courses; management education for behavioral integrity; and scenario-based approach as a teaching tool to promote integrity awareness."--Publisher's information. (shrink)

Of recent time, there has been a proliferation of concerns with ethical leadership within corporate business not least because of the numerous scandals at Enron, Worldcom, Parmalat, and two major Irish banks – Allied Irish Bank (AIB) and National Irish Bank (NIB). These have not only threatened the position of many senior corporate managers but also the financial survival of some of the companies over which they preside. Some authors have attributed these scandals to the pre-eminence of (...) a focus on increasing shareholder value in Western business schools and/or to their failure to inculcate ethical standards. In this paper, we challenge these accounts and the aetiological view of knowledge from which they derive but are grateful for the consensus that they convey regarding the importance of business ethics. The paper focuses on different approaches to ethical leadership concluding with a view that some hybrid of MacIntyre’s virtue ethics and Levinas’s ethics of responsibility may serve as an inspiration for both educators and practitioners. (shrink)

This paper explores the financial reporting scandals of the past decade and the resulting U.S. legislative attempts to impose ethical behavior and control the incidence of new reporting problems via the Sarbanes-Oxley legislation. We begin with a brief historical perspective followed by assertions of ethical consequences of legislation with discussions of key recent corporate scandals, the motives for the frauds, and the consequences. Ethics related provisions of the Sarbanes-Oxley Act are discussed with the potential impact of the (...) legislation on the likelihood of similar future frauds and accompanying prognosis for future corporate ethical behavior. (shrink)

Although the foundation of financial accounting and auditing has traditionally been based upon a rule-based framework, the concept of a principle-based approach has been periodically advocated since being incorporated into the AICPA Code of Conduct in 1989. Recent high profile events indicate that the accountants and auditors involved have followed rule-based ethical perspectives and have failed to protect investors and stakeholders – resulting in a wave of scandals and charges of unethical conduct. In this paper we describe how (...) the rule-based traditions of auditing became a convenient vehicle that perpetuated the unethical conduct of firms such as Enron and Arthur Andersen. We present a model of ten ethical perspectives and briefly describe how these ten ethical perspectives impact rule-based and principle-based ethical conduct for accountants and auditors. We conclude by identifying six specific suggestions that the accounting and auditing profession should consider to restore public trust and to improve the ethical conduct of accountants and auditors. (shrink)

The financial crisis, and associated scandals, created a sense of a juridical deficit with regard to the financial sector. Forms of independent judgement within the sector appeared compromised, while judgement over the sector seemed unattainable. Elites, in the classical Millsian sense of those taking tacitly coordinated ‘big decisions’ over the rest of the public, seemed absent. This article argues that the eradication of jurisdictional elites is an effect of neoliberalism, as articulated most coherently by Hayek. It characterizes (...) the neoliberal project as an effort to elevate ‘unconscious’ processes over ‘conscious’ ones, which in practice means elevating cybernetic, non-human systems and processes over discursive spheres of politics and judgement. Yet such a system still produces its own types of elite power, which come to consist in acts of translation, rather than judgement. Firstly, there are ‘cyborg intermediaries’: elites which operate largely within the system of codes, data, screens and prices. Secondly, there are ‘diplomatic intermediaries’: elites who come to narrate and justify what markets are ‘saying’. The paper draws on Lazzarato’s work on signifying vs asignifying semiotics in order to articulate this, and concludes by considering the types of elite crisis which these forms of power tend to produce. (shrink)

Recent scandals such as those involving Enron and WorldCom (USA), Nortel and Crocus (Canada), and Parmalat and Royal Ahold (EU) exposed failures in corporate governance that shook the capital markets in developed countries and put the spotlight on weak corporate governance in developing, emerging and transitional economies. Companies from developing economies with weak financial transparency and governance will find it difficult to raise capital and attract foreign investors. We investigate the challenges and evaluate the progress of corporate governance (...) in Egypt. Using historical, empirical and interview data, we review the development of stock markets and accounting and financial reporting standards. We analyse the structure of capital markets, major players in the economy, the privatisation policy, board structure and the cultural and legal environment of corporate governance. We review initiatives and impediments for improving corporate governance, including the establishment of the Egyptian Institute of Directors. The implications of this study are important for Egypt, developing countries and global investors seeking international diversification. (shrink)

This second edition of the ground-breaking Ethics in Finance is an up-to-date, valuable addition to the emerging field of finance ethics. Citing examples of the scandals that have shaken public confidence in Wall Street, John R. Boatright explains the importance of ethics in the operation of financial markets and institutions and in the conduct of finance professionals." "Focusing on standards of fairness in market transactions and the duties of fiduciaries and agents in financial relationships, the author introduces (...) a broad range of practical issues related to financial markets, the financial services industry, investment decision making, and corporate financial management. In addition to the topics considered in the first edition, including unethical sales practices, insider trading, the abuse of bankruptcy, and hostile takeovers, the second edition of Ethics in Finance has a broadened scope, incorporating new discussions of issues in mutual funds, conflict of interest, and the financial theory of the firm." "This timely and comprehensive book provides an analysis of ethical issues in finance, suitable for students of finance and business ethics as well as anyone involved in financial activities."--Jacket. (shrink)

The financial crisis and accounting scandals in large companies have stimulated a thorough assessment of the contribution of enterprises and financial institutions to the greater public good and economic prosperity. This assessment has led to a revaluation of the ideas of social entrepreneurship and impact investing. In this article we explore the nature and character of these ideas by a philosophical analysis and by comparison with profit-driven organizations and corporate social responsibility. We show that social entrepreneurs and (...) impact investors distinguish themselves by their social and environmental objectives, their focus on the justified interests of all stakeholders, and their values and world view. We also make a reasonable case that in the coming decade social entrepreneurs and impact investors will play an important role in the development of the global world. (shrink)

Corporate scandals brought the issue of corporate governance to the forefront of the agendas of lawmakers and regulators in the early 2000s. As a result, Congress, the New York Stock Exchange, and the NASDAQ enacted standards to improve the quality of corporate governance, thereby enhancing the quantity and quality of disclosures by listed companies. We investigate the relationship between corporate governance strength and the quality of disclosures in pre- and post-regulation time periods. If cross-sectional differences in corporate governance policies (...) affect the quality of financial disclosures, the quality of information available to analysts varies with such policies. Specifically, higher quality disclosures, produced as a result of strong corporate governance, should lead to more accurate and less dispersed analysts’ forecasts. Our analysis suggests that voluntary implementation of stronger corporate governance enhanced the quality of disclosures in the pre-regulation period; however, exceeding current corporate governance standards does not appear to result in higher quality disclosures post-regulation. These results suggest that SOX and the stronger regulations enacted by U.S. exchanges were effective in reducing variation in the quality of financial information available to investors. (shrink)

Numerous high-profile ethics scandals, rising inequality, and the detrimental effects of climate change dramatically underscore the need for business schools to instill a commitment to social purpose in their students. At the same time, the rising financial burden of education, increasing competition in the education space, and overreliance on graduates’ financial success as the accepted metric of quality have reinforced an instrumentalist climate. These conflicting aims between social and financial purpose have created an existential crisis for (...) business education. To resolve this impasse, we draw on the concept of moral self-awareness to offer a system-theoretical strategy for crowding-in a culture of ethics within business schools. We argue that to do so, business schools will need to (1) reframe the purpose of business, (2) reframe the meaning of professional success, and (3) reframe the ethos of business education itself. (shrink)

. Recent corporate scandals have focused the attention of a broad set of constituencies on reforming corporate governance. Boards of directors play a leading role in corporate governance and any significant reforms must encompass their role. To date, most reform proposals have targeted the legal, rather than the ethical obligations of directors. Legal reforms without proper attention to ethical obligations will likely prove ineffectual. The ethical role of directors is critical. Directors have overall responsibility for the ethics and compliance (...) programs of the corporation. The tone at the top that they set by example and action is central to the overall ethical environment of their firms. This role is reinforced by their legal responsibilities to provide oversight of the financial performance of the firm. Underlying this analysis is the critical assumption that ethical behavior, especially on the part of corporate leaders, leads to the best long-term interests of the corporation. We describe key components of a framework for a code of ethics for corporate boards and individual directors. The proposed code framework is based on six universal core ethical values: (1) honesty; (2) integrity; (3) loyalty; (4) responsibility; (5) fairness; and (6) citizenship. The paper concludes by suggesting critical issues that need to be dealt with in firm-based codes of ethics for directors. (shrink)

In the aftermath of scandals such as those at Enron and WorldCom, there is a growing suspicion of the corporate world. For this reason it is more important than ever for firms to maintain a good reputation. In Building Reputational Capital, Kevin T. Jackson offers a practical guide to taking the high road--the only path that leads to lasting success. Based on extensive research and real-world experience, Building Reputational Capital reveals basic principles of integrity and fairness with which firms (...) can build an enduring reputation. More than image, a firm's reputation is a form of capital often neglected in the boardroom and overlooked in conventional analyses of financial statements. Speaking directly to the work experience of real people in practical business settings, Jackson couples each principle with straightforward actions that drive management systems, and he provides tested strategies--from downsizing techniques to e-commerce tips--that cultivate the hidden power of a good reputation. He outlines the advantages of a superior reputation, describes the vital role the firm's leader must play, offers ways to build and protect your reputation on the Internet, and shows how to rescue your reputation once disaster hits. Perhaps most important, he shows how to strike the right balance of virtues like authenticity, honesty, responsibility, and stewardship of the environment, employees, and the economy. Highlighted with real-life success stories--from giants like Hewlett-Packard to small firms like Thanksgiving Coffee Company, Building Reputational Capital offers a simple but effective guide for executives, managers, entrepreneurs, legal professionals, and corporate consultants. (shrink)

When confronted with an ethical dilemma, most of us like to think we would stand up for our principles. But we are not as ethical as we think we are. In Blind Spots, leading business ethicists Max Bazerman and Ann Tenbrunsel examine the ways we overestimate our ability to do what is right and how we act unethically without meaning to. From the collapse of Enron and corruption in the tobacco industry, to sales of the defective Ford Pinto, the downfall (...) of Bernard Madoff, and the Challenger space shuttle disaster, the authors investigate the nature of ethical failures in the business world and beyond, and illustrate how we can become more ethical, bridging the gap between who we are and who we want to be. Explaining why traditional approaches to ethics don't work, the book considers how blind spots like ethical fading--the removal of ethics from the decision--making process--have led to tragedies and scandals such as the Challenger space shuttle disaster, steroid use in Major League Baseball, the crash in the financial markets, and the energy crisis. The authors demonstrate how ethical standards shift, how we neglect to notice and act on the unethical behavior of others, and how compliance initiatives can actually promote unethical behavior. They argue that scandals will continue to emerge unless such approaches take into account the psychology of individuals faced with ethical dilemmas. Distinguishing our "should self" from our "want self", the authors point out ethical sinkholes that create questionable actions. Suggesting innovative individual and group tactics for improving human judgment, Blind Spots shows us how to secure a place for ethics in our workplaces, institutions, and daily lives. (shrink)

En 1534, le grand chancelier d'Angleterre, sir Thomas More, refuse de prêter serment à l'Acte de Suprématie par lequel Henri VIII d'Angleterre, s'opposant à l'Eglise de Rome, se proclame chef de l'Eglise anglicane. Condamné par le tribunal royal à la décapitation publique, Thomas More demeure pourtant fidèle : fidèle au roi, fidèle à la foi, et fidèle à sa conscience au prix de sa vie. En effet, s'il ne reconnaît pas le roi comme chef de l'Eglise nationale, il n'a jamais (...) remis en cause son autorité temporelle. Sir Thomas More, humaniste, juriste, théologien, diplomate, homme d'Etat et finalement martyr, est devenu un modèle pour ceux qui se dévouent au bien commun. L'Europe troublée du XVIe siècle n'est pas sans rappeler notre époque soumise à la difficile gestion des affaires publiques, aux scandales financiers et à l'avidité de quelques puissants. Ce livre, qui présente la vie de Thomas More et les valeurs fondatrices de son action, peut nous aider à trouver de nouveaux repères pour devenir ferment dans la pâte du monde. Le lecteur saisira alors toute la vérité des paroles adressées par l'humaniste anglais Roger Ascham à la petite- fille de More : "Par cet homme seul, c'est toute l'Angleterre qui s'est trouvée anoblie.". (shrink)

The sheer impact of the recent global financial turmoil and scandals (such as Enron and WorldCom) has demonstrated that unbridled commercial entrepreneurs who are allowed to pursue their short-term opportunities regardless of the consequences has led to a massive depreciation of the wealth of nations, social livelihood and environmental degradation. This article suggests that the time has come for entrepreneurs to adopt a more integrative view of business that blends economic, social and environmental values. Social entrepreneurs present such (...) a proposition through their deep commitment towards the social vision, appreciation of sustainable practices, innovativeness, ability to build social networks and also generate viable financial returns. It could be expected that social entrepreneurs often possess certain distinct personality characteristics which define their behaviours/actions. Personality traits are partly developed by innate nurturing, socialization and education. These tacit traits are also formed values/beliefs held and play an important role in driving social entrepreneurial decision making. Thus, personality traits may influence the intentions and the manner in which the individual acts. We hold that if social entrepreneurship is to be effective and impactful, business and management education can facilitate the development of these critical personality traits. Thus, this study primes at determining the personality traits that influence social entrepreneurs’ start-up intentions. It also reinforces the findings that personality traits do influence entrepreneurship in general. This study examines the influence of the Big Five personality traits on social entrepreneurship dimensions. The findings reveal that agreeableness positively influences all dimensions of social entrepreneurship, whereas openness exerts a positive influence on social vision, innovation and financial returns. Methodologically, this study develops valid and reliable scales for social entrepreneurship and verifies the adopted Big Five personality measure of Schmit et al. (Pers Psychol 53:153–193, 2000) using the five-point Likert scale. The implication of this study is that element of appreciation of social responsibility, sustainability and character development needs to be integrated within the business education curriculum to support social entrepreneurs in realizing genuine value and impact to the causes and communities they serve. Future business leaders also need to be equipped with entrepreneurship skills, while exuding independent and reflective thinking in the pursuit life-long learning. The originality of this study lies in its focus on personality traits on social rather than commercial entrepreneurship. It is hoped that the findings will trigger a paradigm shift towards greater social entrepreneurship through education by nurturing sustainable development values in future business graduates. (shrink)

When confronted with an ethical dilemma, most of us like to think we would stand up for our principles. But we are not as ethical as we think we are. In Blind Spots, leading business ethicists Max Bazerman and Ann Tenbrunsel examine the ways we overestimate our ability to do what is right and how we act unethically without meaning to. From the collapse of Enron and corruption in the tobacco industry, to sales of the defective Ford Pinto, the downfall (...) of Bernard Madoff, and the Challenger space shuttle disaster, the authors investigate the nature of ethical failures in the business world and beyond, and illustrate how we can become more ethical, bridging the gap between who we are and who we want to be. Explaining why traditional approaches to ethics don't work, the book considers how blind spots like ethical fading--the removal of ethics from the decision--making process--have led to tragedies and scandals such as the Challenger space shuttle disaster, steroid use in Major League Baseball, the crash in the financial markets, and the energy crisis. The authors demonstrate how ethical standards shift, how we neglect to notice and act on the unethical behavior of others, and how compliance initiatives can actually promote unethical behavior. They argue that scandals will continue to emerge unless such approaches take into account the psychology of individuals faced with ethical dilemmas. Distinguishing our "should self" from our "want self", the authors point out ethical sinkholes that create questionable actions. Suggesting innovative individual and group tactics for improving human judgment, Blind Spots shows us how to secure a place for ethics in our workplaces, institutions, and daily lives. (shrink)

This book is an examination of the inattention of business schools to moral education, addressing lessons learned from the most recent business corruption scandals and financial crises, and also questioning what we're teaching now and what should be considering in educating future business leaders to cope with the challenges of leading with integrity in the global environment"--Provided by publisher.

Managers often ask why their firm should have an ethics program, especially if no one has complained about unethical behavior. The pursuit of business ethics can cost money, they say. It can lose sales to less scrupulous competitors and can drain management time and energy. But as Harvard business professor Francis Aguilar points out, ethics scandals (such as over Beech-Nut's erzatz "apple juice" or Sears's padded car repair bills) can severely damage a firm, with punishing legal penalties, bad publicity, (...) and irreparably injured customer relations. Equally important if less obvious, unethical behavior can undermine a firm's organizational spirit. On the other hand, Aguilar argues, in a well run firm, ethical programs can actually enhance corporate performance, strengthening the company at every level and supercharging employee risk taking and innovation. In Managing Corporate Ethics, Aguilar shows managers how to create ethical programs within their organizations that not only discourage large-scale wrongdoing, but can contribute substantially to the achievement of corporate excellence. Aguilar's program is down-to-earth and comprehensive, and based on his extensive research on highly successful, ethical companies, both large and small. He recommends action on three fronts: first, get senior management to provide effective ethical leadership; second, set up an ethics program that promotes concern for the interests of people affected by the firm's operations and that provides safeguards against corrupting business pressures; and third, staff the company with ethical people and surround the organization with ethical advisors (including legal, financial, accounting, tax, and marketing consultants). To illuminate this three-step program, Aguilar incorporates the lessons learned in his in-depth study of ten prominent firms with proven successful ethics programs--among them Hewlett-Packard, Johnson & Johnson, Nucor Steel, Cray Research, ServiceMaster, and Texas Instruments. He examines Lincoln Electric's attention to compensation and job security to ensure quality products and to reduce the pressure or temptation to act unethically. He shows how General Mills, while pushing product line managers to compete aggressively, uses corporate staff units to guard against illegal or unacceptable claims (testing cake recipes, for example, to see if a product's quality fails under the less-than-perfect conditions of a normal kitchen). And he details how Armstrong World Industries uses pep talks, inspirational stories, role models, and ready access to management to promote ethical standards among employees. Throughout, Aguilar demonstrates convincingly that an ethical program pays dividends: that employees, suppliers, customers, and the community at large know when they are being treated in a positive and constructive manner, and are likely to respond in kind. Packed with real life examples of successful (and failed) ethical programs, Managing Corporate Ethics is a valuable roadmap to an often overlooked source of business success. (shrink)