Thursday, September 23, 2010

Highlights of Finance and Accounting Ethics Research

Article via Journal of Accountancy.

Interesting Excerpts: 

Recent research suggests a shift in the ethical behavior of management, apparently linked to the highly visible convictions of Enron executives. The timing of two separate studies by the same author reveals interesting changes in the decision-making behavior of management before and after the convictions. This research suggests a movement toward a more “heightened state of ethical awareness” resulting from the greater likelihood of punitive consequences imposed for unethical corporate behavior given high-profile trials for alleged corporate malfeasance.

While principle-centered leadership sets the tone for an organization’s ethical culture and promotes stakeholder voices, trust comes from being able to “see” these features via corporate transparency. Businesses provide information to stakeholders either actively (without being prompted) or passively (having it available only upon request). A reinforcing cycle of principle-centered leadership providing transparency increases the accountability of leadership, thereby reinforcing ethical governance and responsiveness to stakeholder voices. Citing various research studies, the authors conclude that trust, based on ethical leadership and transparency, leads to increased employee loyalty and job satisfaction, which in turn fosters adaptability and productivity, resulting ultimately in overall corporate success.
Click Here to Read: Highlights of Finance and Accounting Ethics Research

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