The purpose of this exploratory study is to examine the use of an ethical intervention strategy - counterexplanation - on individuals' ethical decision-Making. As opposed to providing reasons to support a decision in the case of explanation, counterexplanation is the provision of reasons that either speak against or provide evidence against a chosen course of action. The number of explanations and/or counterexplanations provided by the participants is expected to have a significant effect on ethical evaluation and intention. The number of (...) explanations is expected to be negatively related to ethical decision-making while the number of counterexplanations is expected to be positively related to ethical decision-making. The experiment, that made use of five ethical vignettes, manipulated four treatment groups - explanation, counterexplanation, explanation/counterexplanation, and counterexplanation/explanation. Participants were randomly assigned to one of the four reatments. They performed the requirements of their treatment before recording their ethical evaluations and intentions. As expected, larger numbers of explanations led to less ethical decision-making and larger numbers of counterexplanations led to more ethical decision-making. However, when both types of explanations are required, the order of counterexplaining before explaining is more desirable as it leads to more ethical decision-making. The study also reports that individuals with high social desirability bias may generate less counterexplanations. Implications of the findings are explained in the paper. (shrink)

Increasing gender diversity in the boardroom has been promoted as a way to enhance corporate governance and risk management. This study empirically examines whether boards with more female directors play a role in reducing R&D risk. We first show that female directors help to reduce the positive relationship between R&D investment and future performance volatility. We then report that firms with more gender-diverse boards exhibit a lower adverse effect of R&D on the cost of debt. These results are robust to (...) endogeneity analysis, alternative measures of gender diversity and risky investment, and other sensitivity tests. Overall, our results suggest that female directors improve board effectiveness in risk management with respect to R&D investment. (shrink)

Crisis prevention plans are usually evaluated based on their effects in terms of preventing or limiting organizational crisis. In this survey-based study, the focus was instead on how such plans influence employees’ reactions in terms of risk perception and well-being. Five different organizations were addressed in the study. Hypothesis 1 tested the assumption that leadership crisis preparation would lead to lower perceived risk among the employees. Hypothesis 2 tested the conjecture that it would also lead to a higher degree of (...) well-being. Both hypotheses were supported. The results and their implications are discussed. (shrink)

This study revisits the relation between corporate performance and corporate social responsibility in the context of a major shift in firms’ credit risk status. Relying on corporate credit rating as a performance indicator, we examine whether firms under the scrutiny of rating agencies trade-off CSR engagement for credit quality improvement. To explore whether firms adjust their CSR engagement after a focal rating change, we focus on the investment–speculative grade threshold because of its importance in accessing the public debt market. We (...) find that firms that lose the investment grade rating subsequently increase CSR engagement. We also uncover that improving CSR engagement helps firms restore their credit ratings ex post. Our findings support the view of CSR engagement as a valuable risk management strategy. (shrink)

This article considers financial risk management practice using a virtue ethics lens, in response to ongoing critiques of risk management from within business ethics. Risk management should be seen as embedded within a complex system of cultures, organizations and regulations that are underpinned by a quantitatively reductive or ‘mechanistic’ economic paradigm, where dominant logics of self-interest, profit maximization and short-termism prevail. Building on recent work applying virtue ethics in finance, an alternative to the values, normative expectations and priorities in financial (...) risk management is presented in the form of a refined ‘taxonomy’ of the virtues that can be applied to individuals and organizations engaged in financial risk management. This article aims to contribute to and extend debate on the ethical aspects of risk management and presents an alternative to more technically based critiques which do not engage with the underlying socially constructed foundations of risk management practice. It thereby provides a basis to critique the mechanistic and narrow approach used in the current regulation of the sector. (shrink)

Academic integrity determines the trust that society has in the quality of education and the results of scientific research. More broadly, it influences honesty, respect for ethical principles, and the fair behaviour of society members. Accordingly, higher education institutions should have clear, transparent and well-communicated policies to defend academic integrity among all stakeholders. Taking into account the worldwide dependence on digital technologies, online communication channels should be also used for this purpose. Using qualitative content analysis, this paper aims to investigate (...) how academic integrity is framed by Latvian and Lithuanian state-financed universities in online public spaces in relation to the criteria of an exemplary academic integrity policy. Given the limited content of publicly available university documents, the research findings indicated a poor correspondence to the mentioned criteria. (shrink)

Leading a corporation through a crisis requires rational decision making guided by an ethical approach (Snyder et al., Journal of Business Ethics, 63, 2006, 371). Three such approaches are virtue ethics (Seeger and Ulmer, Journal of Business Ethics, 31, 2001, 369), an ethic of justice, and an ethic of care (Simóla, Journal of Business Ethics, 46, 2003, 351). In this article, I consider the effectiveness of these approaches for leading a corporation after a crisis. The standard I use is drawn (...) from recent studies that examine how people tend to react to corporate unintentional harms. I conclude from these studies that an ethic of care approach is most effective for managing corporate crises when it comes to stakeholder concerns. I conclude the article with strategies for managing a crisis using an ethic of care. (shrink)

How can codes of ethics acquire legitimacy—that is, how can they lay down obligations that will be seen by their subjects as morally binding? There are many answers to this question, reflecting the fact that moral agents have a host of different bases on which they may acknowledge code duties as ethically binding—or, alternatively, may reject those duties as morally irrelevant or actively corrupt. Drawing on a wide literature on legitimacy in other practical fields, this paper develops a multidimensional legitimacy (...) framework, describing ten distinct sources of legitimacy. It illustrates how these sources can be seized, not only by the code’s content, but by opportunities presented in the main stages of code development, adoption and implementation. In so doing, it aims to provide practical resources for code developers and ethics reformers in organizations and industries to avoid critical missteps, and to maximize the impact and efficacy of their work. (shrink)

Approaches to business ethics can be roughly divided into two streams: ‹codes of behavior’ and ‹forms of subjectification’, with code-oriented approaches clearly dominating the field. Through an elaboration of poststructuralist approaches to moral philosophy, this paper questions the emphasis on codes of behaviour and, thus, the conceptions of the moral and responsible subject that are inherent in rule-based approaches. As a consequence of this critique, the concept of a practice-based ‹ethics of responsiveness’ in which ethics is never final but rather (...) always ‹to come’, is investigated. In such an approach the ethical self is understood as being continuously constituted within power/knowledge relations. Following this line, we ask how one can become a responsible subject while also acknowledging certain limits of full responsibility. We thereby explore responsibility as a considered but unconditional openness in response to the other. (shrink)

In the wake of the current financial crises triggered by risky mortgage-backed securities, the question of ethics and risk-taking is once again at the front and center for both practitioners and academics. Although risk-taking is considered an integral part of strategic decision-making, sometimes firms could be propelled to take risks driven by reasons other than calculated strategic choices. The authors argue that a firm's risk-taking propensity is impacted by its ethical climate (egoistic or benevolent) and its emphasis on output control (...) to manage its marketing function. The firm's long-term orientation is argued to moderate the control–risk propensity relationship. The authors also extend research on risk and performance and argue that the association of risk-taking propensity and firm performance is contingent on the ownership (publicly traded versus privately held) structure of the firm. Based on survey data from a sample of manufacturing industries in the United States, the results show significant impact of ethical climate and marketing output control on a firm's risk-taking propensity; also risk-taking propensity shows a stronger association with firm performance in privately held firms than in publicly traded firms. (shrink)

This paper documents that business ethics has positive impacts upon the development of intellectual capital. Knowledge has become the most important asset of modern businesses, and this study argues that business ethics is associated with the development of intangible knowledge resources—intellectual capital. Businesses with ethical values at the core reinforce ethical conducts and successfully build trust with their various stakeholders, leading to the formation of an ethical and trustworthy corporate culture and a positive corporate environment. Thus, in this reasoning, an (...) ethical approach to business can encourage open communication, problems solving, knowledge sharing and creativity among employees to increase organisational capital; enhance interactions and relationships with suppliers, customers and other stakeholders to increase social capital; attract and retain good talent to increase human capital. Questionnaire survey is adopted as the research method with businesses in the electronic and information technology industries in Taiwan as sample. The results suggest that business ethics is associated with increased intellectual capital. Thus, this study demonstrates that the development of intellectual capital is in line with strengthened ethics. It contributes to the literature through combining research on business ethics with intellectual capital theories and extends the extant intellectual capital literature. (shrink)

This paper examines the flow of thoughts on ethics in finance both from academic experts and from published contributions that constitute an alternative view of the financial field from an ethical point of view. A Delphi method was used to achieve consensus about the perceptions and opinions academic experts hold about ethics in financial matters and in the research agenda. This approach permits the early detection of emerging lines, narrowing the research line and shortening subject selection time. An active research (...) map of researchers, countries and lines of investigation was drawn up, and recommendations made of areas that could be highlighted or moderated. (shrink)

A variety of stakeholders including investors, corporate managers, customers, suppliers, employees, researchers, and government policy makers have long been interested in the relationship between the financial performance of a corporation and its commitment to business ethics. As a subject of research, the relations between business ethics and corporate valuation has yet to be thoroughly quantified and investigated. This article is an effort to amend this inadequacy by demonstrating a statistically significant association between ethical commitment and corporate valuation measures. Consistent with (...) anecdotal evidence, we have found a significant association between the ethical commitment of Korean companies and their valuation on the Korean stock market. However, the result reveals that the association between ethical commitment and financial performance is not significantly supported. (shrink)

While corporate failures, such as Enron and WorldCom, have focused attention on issues of business ethics, corporate governance and risk management, there is nothing intrinsically new in the reasons behind their collapse. Neither is there anything fresh in the media's rush to identify a scapegoat. An examination of the financial collapse of Mirror Group Newspapers and Barings Bank, demonstrates failures within both these companies' corporate cultures and management systems, which allowed, if not encouraged, unethical behaviour by key individuals. It is (...) argued that a combination of legislation, regulation, effective risk management and appropriate sanctions are needed, if such unethical behaviour, and resulting corporate failure, is to be prevented in future. (shrink)

Due to the nature of lending practices and support services offered to the poor in developing countries, portfolio risk is a growing concern for the microfinance industry. Though previous research highlights the importance of risk for microfinance organizations, not much is known about how microfinance organizations can mitigate risks incurred from providing loans to the poor in developing countries. Further, though many microfinance organizations practice corporate social responsibility to help create economic and social wealth in developing countries, the impact of (...) such CSR practices remains an underdeveloped area of inquiry. We use a normative ethics lens to develop an ethics-based CSR theory that differentiates between three forms of ethics-based CSR—virtue, consequentialist, and deontological. We argue that while all three forms can help mitigate risk, virtue ethics-based CSR is potentially the most useful form of CSR toward mitigating microfinance portfolio risk. We test our hypotheses using a sample of microfinance organizations from across the world. Our findings suggest that virtue ethics-based CSR is not just an important philosophical paradigm; it can actually help mitigate microfinance portfolio risk when implemented in practice. (shrink)

Particular concern about academic ethics in higher education and research institutions in Lithuania was addressed in 2009 by the national decision to establish an Office of Ombudsman for Academic Ethics and Procedures. The decision was taken during the approval of the revised Law on Higher Education and Research by the Parliament of Lithuania. Following two failed attempts to appoint an ombudsman, the Office began to function in 2014. Since then, the ombudsman, alongside other state institutions, has been empowered to implement (...) national higher education and research policy. At the outset of the Office activity it is important to consider how public HERIs institutionalise academic integrity, i.e. how they create an ethical environment within the academic community and what means are used to support it further. Collecting data from codes of ethics, regulations of academic integrity committees and interviews, data analysis shows that academic values manifest unevenly in teaching/learning and research. Most efforts concern the behaviour of students rather than the behaviour of academic staff. Moreover, ethics infrastructure gives a misleading image, as it lacks harmony and compatibility, despite the fact that there is a myriad of means to foster ethical behaviour. Universities should make greater effort to connect academic values with operations in teaching/learning and research. (shrink)

Do unobservable CEO characteristics predict corporate social performance and are they significantly correlated with CEO compensation? How meaningful is stock-based CEO compensation as a predictor of CSP? To answer these questions, the author empirically examines the relationship between stock-based CEO compensation and CSP while accounting for unobservable CEO characteristics. This study finds that CEO fixed effects account for a significant variance in CSP and that these fixed effects are correlated with CEO compensation variables in a statistically significant manner. The findings (...) suggest that unobservable CEO characteristics should be accounted for when examining the effect of CEO compensation variables on CSP. The findings also highlight the usefulness of stock-based compensation instruments for shareholders and other stakeholders who care about CSP and intend to promote CEO attention to social and ethical issues. (shrink)