Management has the opportunity to promote self-serving accounting practices, such as earnings management, when management can effectively avoid oversight by the audit committee. This article investigates the effects of financial knowledge and dispositional trust on the ability of audit committee members to recognize management attempts to avoid full disclosure to the board and potentially deceive board members. The results of a controlled laboratory experiment with 40 experienced audit committee member participants indicate that: Audit committee members with less financial knowledge (...) are more likely to accept insufficient client explanations for accounting judgments than are more knowledgeable audit committee members; Audit committee members with less financial knowledge are more likely to reject sufficient client explanations for accounting judgments than are more knowledgeable audit committee members; and Audit committee members that place higher levels of trust in others are more likely to accept insufficient client explanations for accounting judgments than are less trusting committee members. (shrink)

Interactions between corporations and nonprofits are on the rise, frequently driven by a corporate interest in establishing credentials for corporate social responsibility (CSR). In this article, we show how increasing demands for accountability directed at both businesses and NGOs can have the unintended effect of compromising the autonomy of nonprofits and fostering their co-optation. Greater scrutiny of NGO spending driven by self-appointed watchdogs of the nonprofit sector and a prevalence of strategic notions of CSR advanced by corporate (...) actors weaken the ability of civil society actors to change the business practices of their partners in the commercial sector. To counter this trend, we argue that corporations should embrace a political notion of CSR and should actively encourage NGOs to strengthen “downward accountability” mechanisms, even if this creates more tensions in corporate–NGO partnerships. Rather than seeing NGOs as tools in a competition for a comparative advantage in the market place, corporations should actively support NGO independence and critical capacity. (shrink)

Management has the opportunity to promote self-serving accounting practices, such as earnings management, when management can effectively avoid oversight by the audit committee. This article investigates the effects of financial knowledge and dispositional trust on the ability of audit committee members to recognize management attempts to avoid full disclosure to the board and potentially deceive board members. The results of a controlled laboratory experiment with 40 experienced audit committee member participants indicate that: (1) Audit committee members with less financial (...) knowledge are more likely to accept insufficient client explanations for accounting judgments than are more knowledgeable audit committee members; (2) Audit committee members with less financial knowledge are more likely to reject sufficient client explanations for accounting judgments than are more knowledgeable audit committee members; and (3) Audit committee members that place higher levels of trust in others are more likely to accept insufficient client explanations for accounting judgments than are less trusting committee members. (shrink)

In this article, I articulate and defend an account of corporations motivated by John Searle’s discussion of them in his Making the Social World. According to this account, corporations are abstract entities that are the products of status function Declarations. They are also connected with, though not reducible to, various people and certain of the power relations among them. Moreover, these connections are responsible for corporations having features that stereotypical abstract entities lack (e.g., the abilities to take actions (...) and make profits). (shrink)

We present asecond-personalaccount of corporate moral agency. This approach is in contrast to thefirst-personalapproach adopted in much of the existing literature, which concentrates on the corporation’s ability to identify moral reasons for itself. Our account treats relationships and communications as the fundamental building blocks of moral agency. The second-personal account rests on a framework developed by Darwall. Its central requirement is that corporations be capable of recognizing the authority relations that they have with other moral agents. (...) We discuss the relevance of corporate affect, corporate communications, and corporate culture to the second-personal account. The second-personal account yields a new way to specify first-personal criteria for moral agency, and it generates fresh insights into the reasons those criteria matter. In addition, a second-personal analysis implies that moral agency is partly a matter of policy, and it provides a fresh perspective on corporate punishment. (shrink)

This paper discusses corporate governance issues from a compliance viewpoint. It makes a distinction between legal and ethical compliance mechanisms and shows that the former has clearly proven to be inadequate as it lacks the moral firepower to restore confidence and the ability to build trust. The concepts of freedom of indifference and freedom for excellence provide a theoretical basis for explaining why legal compliance mechanisms are insufficient in dealing with fraudulent practices and may not be addressing the (...) real and fundamental issues that inspire ethical behavior. The tendency to overemphasize legal compliance mechanisms may result in an attempt to substitute accountability for responsibility and may also result in an attempt to legislate morality which consequently leads to legal absolutism. The current environment of failures of corporate responsibility are not only failures of legal compliance, but more fundamentally failures to do the right (ethical) thing. (shrink)

What is right in the corporation is not what is right in a man's home or in his church," a former vice-president of a large firm observes. "What is right in the corporation is what the guy above you wants from you." Such sentiments pervade American society, from corporate boardrooms to the basement of the White House. In Moral Mazes, Robert Jackall offers an eye-opening account of how corporate managers think the world works, and of how big (...) organizations shape moral consciousnss. Based on extensive interviews with managers at every level of two industrial firms and of a large public relations agency, Moral Mazes takes the reader inside the intricate world of the corporation. It is a world where hard work does not necessarily lead to success, but where sharp talk, self-promotion, powerful patrons, and sheer luck might; where intense competition is masked by cheerfully bland public faces; where intentions are cloaked and frankness is simply one of many guises; and where words are always provisional and accountability often depends on the ability to outrun mistakes. In this topsy-turvy world, managers must bring often unforgiving technology and always difficult people together to make money, an uncompromising task demanding continual compromises with conventional verities. Moral issues are translated into practical concerns and into issues of public relations. Sooner or later, managrs ask themselves: How does one act in such a world and maintain a sense of personal integrity? Moral Mazes is a brilliant, sometimes disturbing, often wildly funny study of corporate thinking, decision-making, and morality. It is an analytical work of great importance, one filled with compelling real life stories of the men and women charged with running the business of America. It is a book for anyone interested in how big organizations actually function, or who is concerned with the current moral malaise in our public life. (shrink)

The business and human rights movement shares several goals with the Benefit Corporation movement: corporations respecting human rights; maintaining a “wide aperture” so that all impacts of a company on people and communities are addressed; and creating rigorous standards of conduct and means of accountability. This paper argues that nonetheless the movements are traveling along parallel tracks and thus missing an opportunity for mutual learning that can improve their effectiveness. The BHR movement can look to B Corps for concrete examples (...) of viable companies that value human rights intrinsically and not just where there is a “business case” to do so. The B Impact Assessment, the B Corp certification tool, can better ensure that B Corps are in fact respecting human rights by adopting BHR standards. And both movements must give greater consideration to the potential contradiction between unlimited scaling—a key goal of B Corps—and the ability of large multinational corporations to respect human rights. (shrink)

Corporate social responsibility has emerged as a concept for business from within developed, Western economies. Such economies are underpinned by functioning institutions, where compliance with regulation is assumed. Recently, however, the ability of this traditional understanding of CSR to take account of the different economic and institutional arrangements found in non-Western contexts has been challenged. It has been argued that CSR research needs to be more contextualized and that the Western interpretation and assumptions about what CSR is (...) and how it is enacted needs to be broadened and challenged to take account of different stages of economic development. With this argument in mind, this article presents a contextualized critique of CSR undertaken in the Russian Federation. Based on a qualitative study involving managers within privatized Russian firms, this article explores the type, nature, and scope of CSR undertaken and attendant motivation of firms to engage in CSR practice. By taking account of the historical and cultural antecedents of both the Soviet Union and the post-Soviet transition period, the author reveals that while the market is driving conventional forms of CSR within some Russian firms, the historical legacy of both the Soviet Union and more recent political developments have a stronger influence on the type and nature of CSR undertaken. These findings challenge the assumptions about both the voluntary nature of CSR and the prerequisites needed for CSR to take place. (shrink)

This paper addresses whether the adoption of Japanese financial practices by U.S. corporations can be used as a basis for encouraging U.S. managers to promote the interests of their (human) organizations over those of stockholders. An historical overview is provided of how the corporate organization in each country evolved and the corresponding development of managers’ responsibilities to the corporate organization versus shareholders. These concepts are then examined within the context of each country’s contemporary corporate financial structure and (...) the corresponding financial responsibilities of managers to the corporate organization versus shareholders. A discussion is then provided of whether the values embodied in each system would affect the ability of the United States to encourage a more “corporate-oriented” ethic in its managers by adopting Japanese financial practices. (shrink)

Corporations despite their status as legally fictitious persons are not such, and to confound them with real persons in even the minimal legal sense is to negate much of the force of the concept of rights when applied to the society. When corporations have rights individual rights become meaningless. While corporations may need some form of protection to make them financially feasible investments, they need not be given the full protection of rights which are assigned to the individual. A much (...) attenuated version of corporate rights is warranted. I would argue against Werhane's notion of a corporation possessing “secondary rights” which can be asserted only after the claims of individual rights have been met. Ibid., p. 62.One solution to the problems raised in this essay would be to ascribe rights to individuals only. This could occur without interfering with the financial independence of the corporation by a simple legal prescription that individuals within a corporation be held responsible for their activities and that the corporation p e r se not be blamed for individual actions. This is consistent with the judgments against the Nazi war criminals who were denied the defense of justifying their actions on the basis of following orders. Responsibility for those actions which are the result of the workings of the “invisible hand” cannot be ascribed to any individual or group of individuals. Donaldson is helpful on this point in recommending an “office of social responsibility” be created as part of the corporation to monitor those actions which otherwise escape scrutiny. Donaldson, Corporations and Morality, p. 207.A more radical solution is to restructure the corporation in such a way as to introduce the element of democracy in the workplace. Opponents would argue that such a practice would diminish the profit-making potential of the corporation by limiting the discretion of the corporate officers in making decisions. Similar arguments have been advanced against the democratic state. Yet democratic states have proven to be viable institutions capable of effective action and demonstrably more survivable than the authoritarian regimes which are the analogs of the corporation.Given the current hierarchical structure of the corporation and its ability to dissolve in the face of questions of responsibility, individual accountability is the only viable solution. This requires that members of the corporation not find cover behind the “invisible hand.” This in turn necessitates the granting of a greater degree of discretionary power to corporate functionaries at all levels. We cannot be responsible for a state of affairs over which we have no effective control. The courts would make the ultimate decision as to the assignation of responsibility in particular cases of corporate crime, with the stipulation that the ascription be to an individual and not “the corporation.” By making corporate officers individually responsible for their actions a much more effective deterrent to corporate crimes would be created. Corporations can easily afford most of the fines that are imposed on them, and corporations cannot be put in prison.The view of the corporation advanced here puts it in a legal and moral position greatly inferior to that of the individual as well as the state. Consequently, corporate needs and welfare must remain a tertiary concern. The rights of the individual must figure primarily, and the welfare of the state as preserver of those rights secondarily, in social policy decisions. The libertarian vision of the corporation is therefore a misguided result of the conflation of the corporation and the individual in the legal and moral realms. Corporations and individuals are ontologically distinct entities and must be recognized as such. The failure to do so has enabled corporations to abrogate individual rights with legal and moral impunity. Such a situation is inconsistent with the demands of a rights-based democracy. (shrink)

Due to growing consumer demand for mission-driven businesses, new corporate forms have emerged over the past decade in the United States. The Benefit Corporation is the fastest-growing of these new forms. Benefit Corporations are for-profit, but allow the firm to declare a “social purpose/benefit” in its articles of incorporation and permit the firm to pursue the benefit in tandem with increasing shareholder value. This paper first attempts to evaluate how effectively states have implemented this legislation. This paper extrapolates potential (...) problems in the irregularities of visibility and record-keeping across the various states through the analysis of data accessibility and legislative differences. Irregularities in the public rollout of this legislation affect the transparency of Benefit Corporations and, as a result, the ability for stakeholders to hold the firm accountable. Complicating these issues is the fact that Benefit Corporation advocacy is largely centralized in a few third party organizations. This paper examines some of the downfalls of such conflated public/private involvement in implementing successful innovative business structures. (shrink)

Due to growing consumer demand for mission-driven businesses, new corporate forms have emerged over the past decade in the United States. The Benefit Corporation is the fastest-growing of these new forms. Benefit Corporations are for-profit, but allow the firm to declare a “social purpose/benefit” in its articles of incorporation and permit the firm to pursue the benefit in tandem with increasing shareholder value. This paper first attempts to evaluate how effectively states have implemented this legislation. This paper extrapolates potential (...) problems in the irregularities of visibility and record-keeping across the various states through the analysis of data accessibility and legislative differences. Irregularities in the public rollout of this legislation affect the transparency of Benefit Corporations and, as a result, the ability for stakeholders to hold the firm accountable. Complicating these issues is the fact that Benefit Corporation advocacy is largely centralized in a few third party organizations. This paper examines some of the downfalls of such conflated public/private involvement in implementing successful innovative business structures. (shrink)

Some accounts of human distinctiveness focus on anatomical features, such as bipedalism and brain size. Others focus on cognitive abilities, such as tool use and manufacture, language, and social cognition. Embodied approaches to cognition highlight the internal relations between these two groups of characteristics, arguing that cognition is rooted in and shaped by embodiment. This paper complements existing embodied approaches by focusing on an underappreciated aspect of embodiment: the appearance of the human body as condition of human sociality and cognition. (...) I approach this issue through Merleau-Ponty’s understanding of the animate body as an intertwining of perceiving and perceivable aspects. The eye is both an animal’s embodied, perceptual openness onto the world, and the means by which that experiential openness can be perceived by others. The morphology and appearance of its embodiment condition how an animal comes to understand others and itself as animate subjects. I interpret the perceivable appearance of the human eye and skin in comparison with those of other animals. An underappreciated dimension of human distinctiveness, I argue, is the way the human sense organs render human perceiving comparatively more perceivable to conspecifics. (shrink)

This article conceptualizes corporate accountability under international law and introduces an analytical framework translating corporate accountability into seven core elements. Using this analytical framework, it then systematically assesses four models that could be used in a future business and human rights treaty: the United Nations Guiding Principles on Business and Human Rights model, the Universal Declaration of Human Rights model, the progressive model, and the transformative model. It aims to contribute to the BHR treaty negotiation process by clarifying (...) different options and possible trade-offs between them, while taking into account political realities. Ultimately, the article argues in favour of the BHR treaty embracing a progressive model of corporate accountability, which combines ambitious development of international law with realistic prospects of state support. (shrink)

Research focusing on the relationship between measures of Corporate Social Responsibility and company financial performance has led to mixed results in the North American context. In addition, the ethical attitudes and approaches toward CSR investments of both companies and rating agencies are not necessarily the same in Europe and the United States. In this study, we use CSR ratings issued by a major European CSR ratings agency to examine in a bi-directional manner the relationships between CSR ratings and financial (...) performance in the European context. By bi-directional, we mean an examination of the relationship between prior CSR ratings and subsequent accounting and financial performance and reciprocally, the impact of accounting and financial performance of year N − 1 on CSR ratings of year N. Our principal findings are: the greater the market capitalization of a company, the higher the Vigeo rating, the higher the risk of the company, the lower the Vigeo rating, and the greater the stock market return of a company, the lower the Vigeo rating. Based on these findings, we propose a concept of “political visibility” pursuant to which enterprises of a greater size are exposed to greater pressure to conform to norms of socially acceptable behavior, a concept of “priorities” in which enterprises that have resolved their most urgent financial needs have a greater ability to invest in CSR, a concept of “rating downgrading” which reveals the sanctioning role of the rating agency from an ethical standpoint. (shrink)

Recent accounting scandals involving the collapse of large corporate firms have brought into question the adequacy of ethics education within accounting programs. This paper investigates the ethical decisions of accountancy students and in particular analyses the effect of group (as opposed to individual) decision-making on ethical decisions. Final year accountancy students (sample size of 165) were randomly allocated into two experimental conditions. The participants were then presented with five (5) ethical vignettes. One experimental condition involved completing the ethical decisions (...) as individuals (60). The other involved completing the ethical decision-making as a group of 3–4 participants (34). A consistent pattern of behaviour was observed in the analysis of individual versus group responses. Individuals displayed stronger tendencies than groups to take the extreme actions of acting either unethically or ethically (whistleblowing), whereas groups displayed stronger tendencies to take the safer (neutral) options. It was concluded that groups reached consensus decisions, in an ethical context, probably as a result of peer pressure. The significant implication of this finding is in relation to the emphasis accounting programs place on group work. Group work may enhance students’ abilities to work as a team. However, as revealed in this study’s results, group work may not be an effective means of producing the optimal decision in all subject matter areas, especially complex areas such as ethical decision-making. (shrink)

The authenticity of the company’s accounting information is an important guarantee for the effective operation of the capital market. Accounting fraud is the tampering and distortion of the company’s public disclosure information. The continuous outbreak of fraud cases has dealt a heavy blow to the confidence of investors, shaken the credit foundation of the capital market, and hindered the healthy and stable development of the capital market. Therefore, it is of great theoretical and practical significance to carry out the research (...) on the identification and governance of accounting fraud. Traditionally, accounting fraud identification is mostly based on linear thinking to build the fraud identification model. However, more and more studies show that fraud has typical nonlinear characteristics, and the multiobjective of fraud means also determines the limitations of using the linear model for identification. Considering that the traditional identification methods may have the defects of model setting error and insufficient information extraction, this paper constructs the support vector machine and logistic regression model to identify accounting fraud. The support vector machine is used to improve the learning ability and generalization ability of unknown phenomena, and the explanatory power of each variable to the whole model is identified by the logistic regression model. This paper breaks through the linear constraint hypothesis and explores the model setting form which is more suitable for the law of corporate fraud behaviour to extract the fraud identification information more fully and provide more powerful support for investors to effectively identify fraud. (shrink)

The aim of this article is to briefly spell out why corporate moral agency is a fallacy and to show how this conclusion should shift the field of business ethics more in the direction of political philosophy and the rule of law. An argument based on a false assumption can be valid, but it cannot be sound. If corporate moral agency is a fallacy, and thus also moral prescriptions for corporations, how do we salvage the field of business (...) ethics? To the extent that business ethics is about corporate behaviour (rather than individual managerial behaviour), the field can shift its foundational paradigm from ethics (which requires the attributes of moral agency) to legal accountability (which can be imposed instrumentally on corporate legal agents). By letting our elected representatives legislate the norms of acceptable corporate behaviour we can hold corporate legal entities legally accountable. What these norms should be then becomes the central focus of business ethics seen through the lens of political philosophy. (shrink)

This paper contributes to biodiversity and species extinction literature by examining the relationship between corporate accountability in terms of species protection and factors affecting such accountability from forward-thinking companies. We use triangulation of theories, namely deep ecology, legitimacy, and we introduce a new perspective to the stakeholder theory that considers species as a ‘stakeholder’. Using Poisson pseudo-maximum likelihood regression, we examine a sample of 200 Fortune Global companies over 3 years. Our results indicate significant positive relations between ecologically conscious (...) companies that are accountable for the protection of biodiversity and species extinction and external assurance, environmental performance, partnerships with socially responsible organizations and awards for sustainable activities. Our empirical results appear to be robust in controlling for possible endogeneities. Our findings contribute to the discussion on the concern of species loss and habitat destruction in the context of corporate accountability, especially in responding to the sixth mass extinction event and COVID-19 crisis. Our results can also guide the policymakers and stakeholders of the financial market in better decision making. (shrink)

The United Nations Guiding Principles on Business and Human Rights, resulting from the work of John Ruggie and his team, largely depend on state action and corporate good will for their implementation. One increasingly popular way for states to prevent and redress violations of human rights committed by companies outside their country of registration is to adopt measures with extraterritorial implications, some of which are presented in the article, or to assert direct extraterritorial jurisdiction in specific instances. Some United (...) Nations human rights bodies and non-governmental organisations are clearly supporting the use of extraterritoriality and have argued that international human rights law places an obligation on states to embrace extraterritoriality so as to better control the activities of companies registered on their territories. In this context, the article aims to determine whether extraterritoriality is the magic potion that will help enhance corporate accountability for human rights violations committed overseas. The article explores whether such obligation exists and, beyond this, whether extraterritoriality should be further encouraged. (shrink)

This paper explores the growing array of initiatives aimed at creating corporate accountability with the goal of attempting to uncover the foundation principles that underlie them and create a floor below which practices are ethically questionable. Using the Global Compact's nine principles and the work of Transparency International as guides, foundational principles seem to exist in the areas of human rights, labor standards, environment, and anti-corruption initiatives.

This paper explores the type of stakeholder engagement currently being undertaken by many organisations as part of social and ethical accounting, auditing and reporting (SEAAR) processes. Specifically, the paper seeks to determine the extent to which current corporate practice iteratively promotes stakeholder participation in collaboratively designing accountability programmes, or whether it merely is a new term for canvassing stakeholder opinions. Arnstein’s Ladder of Citizen Participation is used as a conceptual model for positioning contemporary methods of stakeholder dialogue. The findings (...) from interviews with representatives from twenty‐nine UK and transnational organisations actively engaged in stakeholder dialogue are presented. This paper concludes that contemporary organisations seem to be seeking to engage with stakeholders in partnerships, yet their attempts still fall short of what Arnstein called Citizen Control, the level of achievement that non‐governmental organisations would like stakeholder engagement to attain. (shrink)

This paper explores the relationship between accountability, trust and corporate reputation building. Increasing numbers of corporations are mobilising themselves to put more and more information out into the public domain as a way of communicating with stakeholders. Corporate social accounting and stakeholder engagement is happening on an unprecedented scale. Rather than welcoming such initiatives, academics have been quick to pick faults with contemporary social auditing and reporting, claiming that in its current form it is not about demonstrating accountability (...) at all, but rather about building corporate reputation. Academics argue that ‘accountability should hurt’, that if accountability is an enjoyable process, then the organisation isn’t doing it right. For organisations that are currently engaging with stakeholders and ostensibly becoming more transparent about their corporate social performance, this kind of critique is likely to be bewildering. This paper argues that central to the notion of accountability and to contemporary social accounting practice is the concept of trust. Accountability is based upon a distrust of corporate management, whereas corporate reputation building is about strategically seeking to establish trust in stakeholder relationships in order to negate formal accountability requirements. Using a split trust continuum, the paper seeks to explain and synthesise what seem to be two very different paradigms of organisational transparency. (shrink)

This paper explores the type of stakeholder engagement currently being undertaken by many organisations as part of social and ethical accounting, auditing and reporting processes. Specifically, the paper seeks to determine the extent to which current corporate practice iteratively promotes stakeholder participation in collaboratively designing accountability programmes, or whether it merely is a new term for canvassing stakeholder opinions. Arnstein’s Ladder of Citizen Participation is used as a conceptual model for positioning contemporary methods of stakeholder dialogue. The findings from (...) interviews with representatives from twenty‐nine UK and transnational organisations actively engaged in stakeholder dialogue are presented. This paper concludes that contemporary organisations seem to be seeking to engage with stakeholders in partnerships, yet their attempts still fall short of what Arnstein called Citizen Control, the level of achievement that non‐governmental organisations would like stakeholder engagement to attain. (shrink)

This paper explores the relationship between accountability, trust and corporate reputation building. Increasing numbers of corporations are mobilising themselves to put more and more information out into the public domain as a way of communicating with stakeholders. Corporate social accounting and stakeholder engagement is happening on an unprecedented scale. Rather than welcoming such initiatives, academics have been quick to pick faults with contemporary social auditing and reporting, claiming that in its current form it is not about demonstrating accountability (...) at all, but rather about building corporate reputation. Academics argue that ‘accountability should hurt’, that if accountability is an enjoyable process, then the organisation isn’t doing it right. For organisations that are currently engaging with stakeholders and ostensibly becoming more transparent about their corporate social performance, this kind of critique is likely to be bewildering. This paper argues that central to the notion of accountability and to contemporary social accounting practice is the concept of trust. Accountability is based upon a distrust of corporate management, whereas corporate reputation building is about strategically seeking to establish trust in stakeholder relationships in order to negate formal accountability requirements. Using a split trust continuum, the paper seeks to explain and synthesise what seem to be two very different paradigms of organisational transparency. (shrink)

The aim of our themed symposium is to explore the limits and possibilities of corporate reputation for enabling corporate accountability. We articulate three perspectives on corporate accountability. The communicative perspective equates accountability with disclosure and stakeholder engagement. The phenomenological perspective focuses on stakeholder expectations and reputation management. The consequential perspective focuses on effects/consequences. We then examine how corporate accountability is understood, how it relates to ideals, mission, and purpose, alternative pathways to corporate accountability, reputational consequences, (...) and the role algorithms play in relationships between corporate reputation and accountability. Using a multitude of organizational contexts, these papers advance our understanding of how corporate reputation can be used as a mechanism for creating greater corporate accountability, and for identifying alternative pathways when corporate reputation fails to do so. (shrink)

In this paper, we consider the relationships among corporate accountability, reputation, and tax behavior as a corporate social responsibility issue. As part of our investigation, we provide empirical examples of corporate reputation and corporate tax behaviors using a sample of large, U.S.-based multinational companies. In addition, we utilize corporate tax controversies to illustrate possibilities for aggressive corporate tax behaviors of high-profile multinationals to become a reputation threat. Finally, we consider whether reputation serves as an (...) accountability mechanism for corporate tax behaviors among other mechanisms for holding firms accountable for corporate tax behaviors. Our conceptual work points to a complicated relationship among shareholder, stakeholder, and civic responsibilities in the development and execution of firm’s corporate tax strategies. Building on those insights, our empirical illustration considers corporate reputation data alongside data which reflects corporate tax behavior. Based on this work, we find no clear trend or pattern indicating that reputation is associated with or affected by certain types of corporate tax behaviors. That is, our exploratory empirical illustration suggests that corporate tax behavior does not produce broad reputational consequences that would motivate a change in firm behavior. Drawing from celebrity and strategic silence research, we then suggest that reputation may not be a well-functioning mechanism for holding corporations to account for contributing their fair share of the resources used by government for the benefit of society and offer-related theoretical insights. (shrink)

Over the last 20+ years, multinational corporations (MNCs) have been confronted with accusations of abuse of market power and unfair and unethical business conduct especially as it relates to their overseas operations and supply chain management. These accusations include, among others, worker exploitation in terms of unfairly low wages, excessive work hours, and unsafe work environment; pollution and contamination of air, ground water and land resources; and, undermining the ability of natural government to protect the well-being of their citizens. (...) MNCs have responded to these accusations by creating voluntary codes of conduct which commit them to specific standards for addressing these issues. These codes are created at both the industry-wide and the individual company level. Unfortunately, these codes have generated little credibility and public trust because their compliance claims cannot be independently verified, and they lack transparency and full public disclosure. In this article, we present a case study of the voluntary code of conduct by Mattel, Inc., the world's largest toy company. The code, called the Global Manufacturing Principles (GMP), confronts the general criticism leveled against voluntary codes of conduct by (a) creating detailed standards of compliance, (b) independent external monitoring of the company's compliance with its code of conduct, and (c) making full, and uncensored public disclosure of the audit findings and company's response in terms of remedial action. We present a detailed account of how Mattel's voluntary code of conduct was created, implemented, and ultimately abandoned over 9 years. We provide an evaluative analysis of the company's GMP compliance throughout its life span, which suggests a bellshaped curve, where early top management commitments were met with pockets of resistance from operational groups, who were concerned about balancing GMP compliance efforts with traditional performance criteria. The early stage response from Mattel's top management was quick and supported with the requisite resources. As a result, the compliance process accelerated, becoming increasingly more robust and effective. The success of code compliance and increased transparency in public disclosure energized field managers with a sense of professional satisfaction and publicly recognized accomplishments.The decline in GMP compliance was equally steep. When all the easily attainable targets had been reached at the company-operated plants, addressing vendor plants' compliance presented a new set of challenges, which taxed corporate resources and management commitment. It would seem that value-based and ethicsoriented considerations, i. e., doing the right thing for the right reason, were no longer the driving force for Mattel's management. Mattel did not see any economic benefit from its proactive stance, when competitors did not seem to suffer adverse consequences for not following suit. The final contributing factor to the code's abandonment was a widely publicized series of product recalls which absorbed top management's attention. (shrink)

Accountability is a significant factor in the soundness of the organisational environment in Australia, for both the public and private sectors. The accountability process rests on the quality and accessibility of organisational records, the information environment. While the Australian liberal democratic open society and free market system relies on accountability, paradoxically accountability is constrained by the needs of the open society and the market. Setting appropriate mechanisms for accountability while preserving civil liberty and innovative free markets is a difficult task, (...) and is one that falls to government. Governments have a ubiquitous role in implementing accountability in both the public and the private sectors, and the Australian federal system further complicates governments'' difficult role. The 1990s will bring further corporate pathologies, similar to those of the 1980''s. However the public and private sectors can reduce the impact of corporate pathologies in the 1990''s by learning the lessons of the 1980''s, through placing a priority on inculcating ethical and moral behavior, emphasising democratic values, and raising the organisational status of records. (shrink)

The rash of high-profile accounting frauds involving internal corporate accountants calls into question the individual accountant’s perceptions of the ethical climate within their organization and the limits to which these professionals will tolerate unethical behavior and/or accept it as the norm. This study uses social cognitive theory to examine the antecedents of individual corporate accountant’s perceived personal fit with their organization’s ethical climate and empirically tests how these factors impact organizational attitudes. A survey was completed by 203 (...) class='Hi'>corporate accountants to assess their perception of relevant variables. The results of the structural equation model indicate three significant antecedents relating to ethical climate fit: higher internal levels of locus of control; greater numbers of prior job changes; and higher perceptions of an increasingly better fit with the firm’s ethical climate. Our results also indicate that higher levels of perceived fit to the ethical climate of a firm are associated with higher levels of perceived job satisfaction and organizational commitment. We also theorize that perceptions of an organization’s ethical climate may be reflections of client narcissism and serve a potential indicator of fraud risk. This is an important topic of study, since current auditing standards call for auditors to examine organizational attitudes toward fraud, but offer minimal guidance in doing so. (shrink)

The adoption of the French Duty of Vigilance law has been celebrated as a milestone for advancing the transnational business and human rights regime. The law can contribute to harden corporate accountability by challenging the “separation principle” of transnational companies and by obligating companies to report on their duty of vigilance. However, the question of whether the law actually contributes to human rights and environmental protection along global supply chains requires empirically grounded research that connects processes in home and (...) host state countries. This paper contributes to such a new research agenda by linking political ecology literature and empirical insights from the Global South to research on due diligence regulations. With reference to field research data on contestations between the oil and gas company Total E&P and indigenous communities in Bolivia, I argue that the burden of proof and contestations over valid knowledge represent major obstacles when trying to establish legal liability. (shrink)

This paper argues that ethical evaluation of leadership requires standards of assessment that are independent of the definition of "leader." It suggests that Stakeholder Theory is incapable of providing a substantive standard of assessment. It suggests an alternative model for adjudicating between stakeholders' conflicting claims of right and it applies that method to determine what responsibilities corporate management might have to employees and how management might be held accountable for discharging those responsibilities.

This paper explores the prospects for dispositional accounts of abilities. According to so-called new dispositionalists, an agent has the ability to Φ iff they have a disposition to Φ when trying to Φ. We show that the new dispositionalism is beset by some problems that also beset its predecessor, the conditional analysis of abilities, and bring up some further problems. We then turn to a different approach, which links abilities not to motivational states but to the notion of success, (...) and consider ways of implementing that approach. Our results suggest that there are principled disanalogies between abilities and disposition which prevent any dispositional account of abilities from succeeding. (shrink)

This study examines the impact of chief executive officer ability on firms’ corporate social responsibility performance. We find that firms’ CSR performance increases with CEO ability. Specifically, firms with more able CEOs are associated with more socially responsible activities and fewer socially irresponsible activities, and are associated with more stakeholder CSR rather than third-party CSR. We further find that the positive relation between CEO ability and CSR is weakened for CEO who is also the chair of (...) the board and for CEO who is close to retirement; and is weakened when the CSR emphasis exerted by a firm’s external environment is high. Our results are robust after controlling for firm fixed effects and to the use of multiple measures of CSR performance and CEO ability. Overall, our evidence is consistent with our conjecture that more able CEOs have less career concerns so that these CEOs are more willing to undertake long-term investments in socially beneficial activities, leading to better CSR performance. (shrink)

Critics of SRI have said little about the integrity of corporate representations resulting in screening inclusion or exclusion. This is surprising given social and environmental accounting research that finds corporate posturing and deception in the absence of external verification, and a parallel body of literature describing corporate "greenwashing" and other forms of corporate disinformation. In this paper I argue that the problems and challenges of ensuring fair and accurate corporate social reporting mirror those accompanying (...) class='Hi'>corporate compliance with law. Similarities and points of convergence between social reporting and corporate compliance are discussed, along with proposals for reform. (shrink)

According to Palazzo and Scherer, the changing role of business corporations in society requires that we take new measures to integrate these organizations into society-wide processes of democratic governance. We argue that their model of integration has a fundamental problem. Instead of treating business corporations as agents that must be held accountable to the democratic reasoning of affected parties, it treats corporations as agents who can hold others accountable. In our terminology, it treats business corporations as “supervising authorities” rather than (...) “functionaries.” The result is that Palazzo and Scherer’s model does not actually address the democratic deficit that it is meant to solve. In order to fix the problem, we advocate removing business corporations from any policymaking role in political CSR and limiting participation to political NGOs and other groups that meet the standards we set out for a politically representative organization (PRO). (shrink)

The 3rd Report of the Special Representative of the Secretary-General of the United Nations appears to have generated significant consensus around its approach to business and human rights. This state of harmony relies mainly upon a narrow mandate limiting the endeavour largely to a mapping exercise. It also relies upon a process of 'operationalisation' that is yet to be undertaken despite the recent release of a 4th Report. After a brief presentation of the main parameters of the framework proposed by (...) the 3rd Report and of its precarious advantage over other similar initiatives, this article takes a close look at the main link that needs to be operationalised: i.e. the link between corporate responsibility for human rights and the concept of legal and criminal responsibility. The article then addresses the constitutive elements of the concept of responsibility to shed light upon the responsibility of business organisations in a human rights law context. It looks at the innovative ways in which the concept of corporate criminal responsibility has been dealt with in various domestic jurisdictions and at the new paradigms of corporate agency resulting in the process. Building on this inquiry, the analysis focusses on the way in which the legal discourse acquires new dimensions of corporate responsibility by moving away from an individualistic perspective. On the basis of this, the article suggests conceptual tools that can become instrumental in the process of the operationalisation of the 3rd Report, albeit at the likely cost of rendering the consensus around it more fragile. (shrink)

We use institutional-related theories and a unique natural experiment that enables an exogenous test of the influence of controlling shareholders on managerial accountability to corporate fraud. In China, prior to the Split Share Structure Reform, state shareholders held restricted shares that could not be traded. This restriction mitigated state-owned enterprise controlling shareholders’ incentives to monitor managers. The data examined show the SSSR strengthens incentives of state-owned enterprise controlling shareholders to replace fraudulent management. Our findings support the view that economic (...) incentives are important to promote corporate governance and deter fraud. (shrink)

Although agreement on the positive sign of the relationship between corporate social and financial performance is observed in the literature, the mechanisms that constitute this relationship are not yet well-known. We address this issue by extending management’s stakeholder theory by adding insights from psychology’s prospect decision theory and sociology’s resource dependence theory. Empirically, we analyze an extensive panel dataset, including information on disaggregated measures of social performance for the S&P 500 in the 1997–2002 period. In so doing, we enrich (...) the extant literature by focusing on stakeholder heterogeneity, perceptional framing, and disaggregated measures of corporate social performance. (shrink)

The results of a survey of 272 practicing accountants and 374 accounting students enrolled in six universities are analyzed. Differences and similarities between the two groups with regard to their attitudes toward corporate social responsibility are examined. The results indicate that the students exhibit greater concern about the ethical and discretionary components of corporate responsibility and a weaker orientation toward economic performance. No significant differences between the two groups were observed with respect to the legal dimension of (...) class='Hi'>corporate social responsibility. Some explanations as well as limited generalizations and implications are developed. (shrink)

Recently, I have proposed an extension of the framework of the ethics of collegiality (Berber & Subotić, forthcoming). By incorporating an anti-individual perspective and the notion of epistemic competence, this framework can reveal the epistemic virtue/vice relativism, which, in turn, charts the tension between being a good colleague and an efficient, loyal employee. In this paper, however, I want to sketch how the ethics of collegiality could be applied to practical domains, such as the historical accountability and atonement of corporations (...) that participated in the anti-Semitic policies of the Third Reich and contributed to the Holocaust by using slave or forced labor. New studies suggest that corporations ought to engage in deeper historical reflection and ethical dialogue between Shoah survivors and top managers to address the issue of industrial compliance (Federman 2021), whereas most of the work on this topic traditionally focused on the issue of reparations litigation (Kelly 2016, Neuborne 2003). Through the notions of collective institutional epistemic vice and institutional ethos (Fricker 2021), the upshot is to assess whether it is feasible for corporations to be genuinely repentant regarding their role in the Holocaust thanks to the ethics of collegiality instead of merely offering compensation. I will argue that instead of emphasizing ethical leadership and the top-down approach to the (re-)implementation of values in corporate conduct, the spotlights should be on the bottom-up approach grounded in collegial solidarity among all employees. (shrink)