This article presents a theory of how the consumption of Islamic products may promote morally consistent behavior over time. We identify and examine three unique meta-characteristics (MCs) of Islamic ethics: ubudiyah (subservience to God), akhirah (focus on the hereafter or the long-term), and tawado (being modest while doing an ethical act). In four experiments, we show that after consumption of an Islamic banking product, MCs produce moral consistency or repeat ethical behavior, which is one major objective of an ethical system. (...) We also show that the absence of MCs results in moral inconsistency, that is, unethical behavior follows earlier consumption of an Islamic banking product due to the mediating psychological mechanism of moral licensing. Hence, it is not only the enactment of general ethical practices, rather the enactment of ethical practices in the specific context set by the MCs through which Islamic ethical system promotes ethical conduct and prevents unethical conduct. The findings have implications for Islamic ethical system and Islamic banking. (shrink)

We revisit religiosity, gender, age, ethics education and experience as drivers of ethicality, while expanding prior research from Anglo-Saxon and Asiatic/Euro-Asiatic countries to a Latin European country, Portugal. We apply the Merchant instrument of attitudes towards earnings management, in a sample of Portuguese accounting students and alumni. We find no significant evidence of a positive association between religiosity and accountants’ judgments on earnings management. However, gender, age, education and experience are significant predictors of accountants’ judgments. The results are unchanged when (...) we control for the intent of earnings management. Females, older individuals and alumni judge accounting earnings management more harshly than males, younger individuals, and students. A higher level of accounting work experience induces accountants to judge accounting earnings management as a less ethically questionable practice. This finding is theoretically relevant because it underscores the necessity of taking people’s constraints in the workplace into consideration when studying ethical behavior in business contexts. The results are also practically relevant, as they highlight the importance of a systematic ethics education throughout the accountant’s life. (shrink)

Ethically questionable leader conduct continues to garner headlines. It has prompted the leadership field to renew their focus on research regarding the ethical dimensions of leadership. Empirical emphases have focused on understanding negative leader behaviour, with the typical leadership study reliant upon positivist approaches. I critique these studies as not having produced meaningful, practicable or wholly relevant insights regarding the challenges and support mechanisms required to lead ethically. Few studies have in fact examined leadership in not-for-profit organisations where decisions might (...) reasonably be expected to possess elevated moral capital. To test this, my study interviewed leaders from professional sectors in both the USA and the UK, to offer a more holistic interpretation of what underpins and directs leader moral disposition. As corollary, this research explicates issues of practicability and how other sectors might learn from leaders who perpetually practise their ethicality. To gain insights that develop the field of leadership research, my thesis centres on the experiences of ten high-level, elite and specialised leaders. Although not selected as ethical, they were found to be principled, ethical decision-makers. A specific type of in-depth, qualitative interviewing was conducted and justified to more readily reflect the status of the leaders. Elite and specialised interviewing has not been widely used as a data collection tool, but it offered a unique opportunity to garner specialised data, once access issues had been overcome. The findings reveal unique insights into the underexplored ethical leader mindset and highlight the complex processes of leader decision-making in situ by demonstrating what underpins leaders’ behaviour, with reference to how they understand experiences for themselves. This study uncovers the symbiotic and interconnected nature of the variety of ideological frameworks at play, positing theological concepts alongside sociological and philosophical counterparts. Ethical awareness, the notions of trust and responsibility are shown as bedrock and explicit. This research presents a new ethical leadership, a typology that shows how ethical leaders are created through experience, sustained and developed over time, and nourished by awareness beyond the self. Current conceptions have done little to inform ethical leadership development, whereas I offer a more practical and holistic way to use the unexpected, traumatic, and intense crucibles of leadership experience to explicate and consolidate ethical foundations. This thesis presents a vision of a welfare driven leadership originating from the self, in the service of others, and for society; an ethical leadership for all. (shrink)

Christian ethics applied to economics and business has a long tradition. This dates back at least to the thirteenth century, with noteworthy developments in the four following centuries and again in the last century. Christian faith and reason intertwine to bring about principles, criteria, and guidelines for action and a set of virtues with relevance for economic activity. Christian spirituality, with 2000 years of history, has been embedded in Christianity from its beginning, but the application to modern business activity is (...) relatively recent. This article introduces a special issue which, we hope, will make its own small contribution to the developments of both Christian ethics and spirituality in the leading business organizations. After a short historical overview and a consideration of the current situation of Christian ethics and spirituality in business, we introduce the papers selected for this issue. (shrink)

This paper looks at whether the tenets of Islam are consistent with the 'Ten Principles' of responsible business outlined in the UN Global Compact. The paper concludes that with the possible exception of Islam's focus on personal responsibility and the non-recognition of the corporation as a legal person, which could undermine the concept of corporate responsibility, there is no divergence between the tenets of the religion and the principles of the UN Global Compact. Indeed, Islam often goes further and has (...) the advantage of clearer codification of ethical standards as well as a set of explicit enforcement mechanisms. Focusing on this convergence of values could be useful in the development of a new understanding of CSR in a global context and help avert the threatened "clash of civilisations". (shrink)

This paper reports on the findings of a qualitative study to understand how active adherence to the Christian faith influences the way SME owner-managers conceptualise their business practices. The study was based on in-depth interviews with 21 Christian SME owner-managers in Germany and the UK. Using a socio-psychological approach, the data analysis yielded a range of linguistic and conceptual resources that are peculiar to Christian discourse and that have the potential to influence business activity in rather distinctive ways. This paper (...) particularly focuses on those Christian concepts that could be regarded as distinct 'frames' for action. It outlines what effect these concepts had on the respondents and how they were related to business practices. The paper also discusses how this study could inform further research into the influence of other socio-cultural forms of identity on economic actors' conceptualisations of their own practice. (shrink)

The relationship between religiosity and ethical behavior at work has remained elusive. In fact, inconsistent results in observed magnitudes and direction led Hood et al. (The psychology of religion: An empirical approach, 1996 ) to describe the relationship between religiosity and ethics as “something of a roller coaster ride.” Weaver and Agle (Acad Manage Rev 27(1):77–97, 2002 ) utilizing social structural versions of symbolic interactionism theory reasoned that we should not expect religion to affect ethical outcomes for all religious individuals; (...) rather, such a relationship likely depends on specific religious attitudes including religious motivation orientation (intrinsic RMO vs. extrinsic RMO), perceived sacred qualities of work (job sanctification), and views of God (VOG, loving vs. punishing). We examined the effects of these three religious attitudes on participants’ judgments of 29 ethically questionable vignettes. Consistent with symbolic interactionism theory, intrinsic RMO and having a loving view of God were both negatively related to endorsing ethically questionable vignettes, whereas extrinsic RMO was positively related to endorsing the vignettes. Unexpectedly, job sanctification was positively related to endorsing the vignettes. However, both intrinsic and extrinsic RMO moderated this relationship such that sanctifying one’s job was related to ethical judgments only for those who were: (a) low in intrinsic RMO or (b) high in extrinsic RMO. We reasoned based on symbolic interactionism theory that intrinsically motivated participants, in contrast to extrinsically motivated participants, may have utilized their religious beliefs as a guiding framework in making ethical judgments. (shrink)

This work extends the consideration of spirituality and leadership to the field of strategic leadership. Future development in the field of spirituality and leadership will depend on greater clarity concerning the level of analysis, and will require a distinction between personal and collective spirituality. Toward that end, a framework is proposed that describes how the personal spiritual beliefs of a top level leader operate in strategic decision making like a schema to filter and frame information. This function is mediated by (...) the leader’s constructive development and meta-belief and moderated by the organizational context and leadership style. This framework provides a starting point for considering the many expressions of spirituality in organizations and serves as a foundation for a multi-level theory of spirituality and leadership. (shrink)

This study explores Islamic influences on corporate bribery practices in Indonesia. As the dominant religion in Indonesia, Islam substantially influences society in everyday life, including business practices. Although bribery issues in Indonesia have been raised in great numbers for many years, few studies have explored the role of Islamic influences in the ways businesspeople rationalize corporate bribery. This study aims to explore the lived experiences of businesspeople involved in corporate bribery. The authors conducted a phenomenological study to analyze the mindsets (...) of businesspeople who used the Islamic religion to rationalize corporate bribery. To this end, a phenomenological study was conducted based on in-depth interviews with inmates who were imprisoned for their bribery practices in Indonesia. The interview data were subsequently analyzed and revealed several ways that Indonesian businesspeople invoked Islam to rationalize their practices of bribery and render them coherent with their mindsets. The analyses in this study provide insights into how to curb the rationalization of corporate bribery via religious perspectives and point to recommendations for future research. (shrink)

Prior research argues that religiosity increases the ethical behavior and levels of risk aversion of firm managers. To the extent that this is true, more religious countries might exhibit more stability in stock prices. This study tests this assertion by determining whether religiosity in countries is negatively associated with volatility in financial markets. Using a unique empirical design, we account for the possibility that the structure of financial markets is endogenously related to a country’s religiosity by examining the volatility of (...) American Depositary Receipts while conditioning on a number of home country variables capturing religiosity. We also control for the possibility of endogeneity bias by identifying an appropriate instrumental variable. Interestingly, our tests show that religious affiliation and, to a lesser extent, religious adherence and religious beliefs negatively affect the level of ADR volatility. (shrink)

This paper explores the relationship between religious denomination and individual attitudes to Corporate Social Responsibility (CSR) within the context of a large sample of over 17,000 individuals drawn from 20 countries. We address two general questions: do members of religious denominations have different attitudes concerning CSR than people of no denomination? And: do members of different religions have different attitudes to CSR that conform to general priors about the teachings of different religions? Our evidence suggests that, broadly, religious individuals do (...) not prioritise the responsibilities of the firm differently, but do tend to hold broader conceptions of the social responsibilities of businesses than non-religious individuals. However, we show that this neither true for all religious groups, nor for all areas of CSR. (shrink)

This article compares the ethical attitudes of Ukrainian business professionals with those of United States business professionals. A widely used survey instrument consisting of 16 hypothetical situations involving ethical dilemmas was employed to gather information on ethical attitudes in the two countries. On 13 of 16 vignettes, Ukrainian respondents demonstrated less stringent ethical attitudes than did their United States counterparts. Possible reasons for these differences are discussed, with primary emphasis on the transition from one economic system to another that is (...) underway in Ukraine. Comments from Ukrainian respondents are presented so as to give an indication of the thought processes behind the questionnaire responses. (shrink)

Using a sample of 11,357 firm-year observations from the Chinese stock market for the period of 2001–2011, we investigate whether and how religion can mitigate earnings management. Specifically, based on geographic-proximity-based religion variables, we provide strong and robust evidence to show that religion is significantly negatively associated with the extent of earnings management, suggesting that religion can serve as a set of social norms to mitigate corporate unethical behavior such as earnings management. Our findings also reveal that the negative association (...) between religion and earnings management is less pronounced for firms with closer distance to the regulatory centers than for their counterparts, implying the substitutive effects between religion and the distance to regulators on mitigating earnings management. The above results are robust to different measures of earnings management, various religion variables, and a variety of sensitivity tests. (shrink)

Despite the obvious link between spirituality, religiosity and ethical judgment, a definition for the nature of this relationship remains elusive due to conceptual and methodological limitations. To address these, we propose an integrative Spiritual-based model derived from categories presumed to be universal across religions and cultural contexts, to guide future business ethics research on religiosity. This article aims to empirically test in the context of Islam. It examines how different Muslims' views of God influence their ethical judgments in organizations, and (...) how this process is mediated by their religious practice and knowledge. Comprising focus group and vignette designs, the study was carried out with a random sample of 427 executives and management professionals from Saudi. After data collection, the study hypotheses were tested using structural equation modeling. The findings confirmed that a view of God based on hope might be more closely associated with unethical judgments than a view based on fear or one balancing hope and fear. Furthermore, religious practice and knowledge were found to mediate the relationship between Muslims' different views of God and their ethical judgments. These results provide unique theoretical insights into religiosity's influence on ethical judgment, with important implications for management. (shrink)

Despite growing interest in examining the role of religion in business ethics, there is little consensus concerning the basis or standards of “good” or ethical behavior and the reasons behind them. This limits our ability to enhance ethical behavior in the workplace. We address this issue by examining worldviews as it relates to ethics research and practice. Our worldview forms the context within which we organize and build our understanding of reality. Given that much of our academic work as well (...) as business practice operate from a modern worldview, we examine how modernism shapes our beliefs and approaches to ethics in business and academia. We identify important limitations of modernism in addressing moral issues and religion. We then introduce the Christian worldview as an alternative approach to examining ethical issues in business. (shrink)

As a result of numerous, highly publicized, ethical breaches, firms and their agents are under ongoing scrutiny. In an attempt to improve both their image and their ethical performance, some firms have adopted ethical codes of conduct. Past research investigating the effects of ethical codes of conduct on behavior and ethical attitudes has yielded mixed results. In this study, we again take up the question of the effect of ethical codes on ethical attitudes and find strong evidence to suggest that (...) business professionals employed at firms with ethical codes of conduct are significantly less accepting of ethically questionable behavior toward most stakeholders. One notable exception relates to ethical actions toward customers. (shrink)

The aim of our research is to analyze how different religions influence business ethics. We develop an index of practices in the field of business ethics, made up of 19 items containing practices related to workers, consumers, products, human rights, management of ethical conflicts, and crime prevention. Also, we consider a wide range of religion affiliations. To undertake this research, we use a panel data sample composed of 11,956 firm‐year observations from 18 countries. Drawing on stakeholder theory, we posit some (...) hypotheses based on the religions considered. The results obtained show that a higher percentage of religious adherents in the country where a company does business usually involve the implementation of more ethical practices in the corporate field. These findings are obtained for Christian, Islamic, Jewish, and Hindu religions. In contrast, this does not stand for Buddhist and folk religions. Also, countries where there is no predominant religion do not show a confluence between religion and ethical corporate practices. (shrink)

Research indicates that religious values and ethical behavior are closely associated, yet, at a firm level, the processes by which this association occurs are poorly understood. Family firms are known to exhibit values-based behavior, which in turn can lead to specific firm-level outcomes. It is also known that one’s family is an important incubator, enabler, and perpetuator of religious values across successive generations. Our study examines the experiences of a single, multigenerational business family that successfully enacted their religious values in (...) their business. Drawing upon intergenerational solidarity and values-based leadership theory, and by way of an interpretive, qualitative analysis, we find that the family’s religious values enhanced their cohesion and were manifested in their leadership style, which, in turn, led to outcomes for the business. Our findings highlight the processes that underlie the relationship between religious values and organizational outcomes in family firms and offer insights into the role of solidarity in values-based leadership. (shrink)

We extend research on the effects of local audit office characteristics on audit quality by investigating whether audit offices in highly religious U.S. Metropolitan Statistical Areas exhibit going concern decisions that reflect heightened professional skepticism relative to audit offices in less religious MSAs. Prior research links religiosity to risk aversion and ethical development and suggests audit practice offices in more religious MSAs are more likely to issue going concern opinions because they will assess the effects of mitigating factors in a (...) more skeptical manner. Our results indicate that audit practice offices located in highly religious MSAs are more likely to issue going concern audit opinions, consistent with a more skeptical assessment of mitigating factors. Additional tests provide direct evidence consistent with the argument that these audit offices are more risk averse in issuing going concern opinions. Our findings are relevant to auditors, audit clients, researchers, and regulators. (shrink)

Chinese consumers comprise a unique subculture that exerts a considerable influence on the market and are treated as a collective group by researchers. However, few studies have examined the effects of collectivism and consumer attitudinal attributes on consumer ethics. Although the practice of religion was prohibited in China before economic reforms in the late 1970s, religion remains a major factor that affects the ethical judgment of consumers. The present study, based on the Hunt–Vitell model, examines the influence of culture and (...) personal characteristics on consumer ethics. A total of 284 Chinese consumers were surveyed. Structural equation modeling was used to test hypothesized relationships in the research model. The results indicate that collectivism had a significant explanatory power for four dimensions of consumer ethical beliefs: actively benefiting from illegal activities; passively benefiting from questionable activities; actively benefiting from deceptive legal activities; and engaging in no harm and no foul activities. However, consumer attitude toward business significantly explained only the passive dimension of consumer ethics, and religious beliefs significantly explained only the active dimension of consumer ethical beliefs. (shrink)

The "justice of markets" is intricately connected to the treatment of the poor and the disadvantaged in market economies. The increased interest of multinational corporations in low-income market segments affords, on one hand, the opportunity for a more inclusive capitalism, and on the other, the threat of greater exploitation of poor and disadvantaged consumers. This article traces the contributions of Catholic Social Teaching and its basic principles toward providing insight into what constitutes "justice" in such "marketing to the impoverished" situations.

Forsyth’s (1980) Ethics Position Questionnaire and Hunt et al.’s (1989) Corporate Ethical Value Questionnaire are used to examine the ethical ideologies of senior managers from organizations listed in the Australian Stock Exchange. The results indicate how corporate ethical values, religion, gender, and age are related to the idealism and relativism of senior Australian managers. After discussing the results, limitations of the study are offered. Finally, managerial implications are provided and recommendations for future research are given.

Based on an analysis of 44 cases in Canada, Tunisia, and Cameroon, this research attempts to determine the fundaments of sustainable entrepreneurship (SE) in an international perspective and to shed the light on the potential impact of economic, institutional, and cultural dimensions upon diverse levels of sustainability in smalland medium-size firms (SMEs). Neo-institutional and entrepreneurship theories were combined in an integrative conceptual model to fully embrace the meanings and practices of SE and to question the "culture free" argument of some (...) prescriptions as well as some international programs. The analysis of the rationale behind entrepreneurs committed to sustainability in the three countries compared to less engaged firms shows that entrepreneurs' individual values are crucial in all cases. Socio-cultural specificities and institutional realities can, however, be more or less inductive to the adoption of sustainable practices in SMEs. This study also demonstrates that external stimuli are needed in Tunisia and Cameroon to reach the same environmental involvement as found in Canada. Moreover, support programs to assist SMEs with the adoption of sustainable practices and communication about the issue have to be tailored to the entrepreneur's motives, the firms' levels of openness to sustainability, the socio-cultural practices already embedded, and the countries' priorities. Implications for policy, management, and research are also discussed. (shrink)

Using a sample of Chinese listed firms in polluting industries for the period of 2008–2010, we empirically investigate whether and how Buddhism, China’s most influential religion, affects corporate environmental responsibility (CER). In this study, we measure Buddhist variables as the number of Buddhist monasteries within a certain radius around Chinese listed firms’ registered addresses. In addition, we hand-collect corporate environmental disclosure scores based on the Global Reporting Initiative (GRI) sustainability reporting guidelines. Using hand-collected Buddhism data and corporate environmental disclosure scores, (...) we provide strong and robust evidence that Buddhism is significantly positively associated with CER. This finding is consistent with the following view: Buddhism can serve as social norms to evoke the consciousness of social responsibility, and thereof strengthen CER. Our findings also reveal that the positive association between Buddhism and CER is attenuated for firms with higher law enforcement index. The results are robust to various measures of Buddhism and a variety of sensitivity tests. (shrink)

For a sample comprising 36,105 U.S. firm-year observations from 1985 to 2008, we find that firms located in more religious counties enjoy cheaper equity financing costs. This result is robust to a battery of sensitivity tests, including alternative assumptions and model specifications, additional controls for noise in analyst forecasts, and various approaches to addressing endogeneity. In another set of tests, we find that the equity pricing role that religion plays comes predominantly from Mainline Protestants. We also document that the effect (...) of religiosity on firms’ cost of equity capital is larger for firms (periods) lacking alternative monitoring (regulation) mechanisms as measured by lower institutional ownership (the pre-SOX era), implying that religion plays a corporate governance role. Finally, we find that the importance of religion to equity pricing is concentrated in firms that suffer lower visibility, which tend to be more sensitive to local social and economic factors. By examining the links between religiosity and valuation at the firm level, we provide strong, robust evidence supporting the perspective that religion facilitates economic development. (shrink)

This study investigates how Islamic religiosity affects ethical decision making. The study was conducted in the Malaysian workforce across the public and private sectors with a sample of N = 160. Five factors are tested to determine if they mediate the relationship between Islamic religiosity and ethical intention. These factors are: perceived importance of the ethical issue, moral judgment, ego strength, spiritual intention, and conscience. A parallel mediation design was chosen to test six hypotheses derived from the theoretical literature. The (...) findings indicate that only the variable conscience mediates the relationship between religiosity and ethical intention. This study gives insights into the role of Islam in ethical decision-making, especially for Muslims in Malaysia, an area which has limited exploration. More generally, it contributes to the ongoing discussion in the literature on the relationship between religiosity and ethical decision-making. (shrink)

Family values are argued to enable ethical family business conduct. However, how these arise, evolve, and how family leaders articulate them is less understood. Using an ‘identity work’ approach, this paper finds that the values underpinning identity work: arise from multiple sources, evolve in tandem with the context; and, that their articulation is relational and aspirational, rather than merely historical. Prior research mostly understood family values as rooted in the past and relatively stable, but our rhetorical analysis unlocks a more (...) dynamic and promising research direction advancing family business ethics. (shrink)

Religion is an important cultural and individual difference variable. Yet, despite its obvious importance in consumers’ lives, religion in the United States has been under-researched. This study addresses that gap in the literature and investigates the influence of consumer religion in the buyer–seller dyad. Specifically, this study examines the influence of consumer religious commitment and a Christian consumer’s conservative beliefs in the United States on store loyalty when retailers make business decisions which are potentially reli- gious objectionable. This study uses (...) structural equation modeling and applies Anderson and Gerbing’s :411–423, 1988 ) two-step approach to exam- ine data obtained from a national sample of 531 consumers. The results from this study suggest that consumers evaluate seller’s actions and form ethical judgments. These judgments are a major explanatory variable in consumer store loyalty intentions. (shrink)

This paper aims to develop a better understanding of the influence of the social environment in which entrepreneurs reside on the success of the crowdfunding projects they propose. Specifically, this study investigates on the importance of local religiosity on the propensity to support cross-regional crowdfunding projects. We theoretically discuss and empirically document, using a dataset of 5841 contributions on three Swiss reward-based and donation-based platforms, that local religiosity affects cross-regional resource flows by creating social interactions and enhancing trust. Furthermore, we (...) find that cross-regional resource flows are more likely between regions sharing the same primary religion—whether Protestant or Catholic. (shrink)

Charity governance is undergoing a crisis of confidence. In this paper, we suggest an alternative approach to how governance could be perceived and conceptualized by considering the ethical notions of governance embedded in religious enquiry, with a specific focus on the Islamic perspective of governance. We firstly develop an ethical framework for charity governance, utilizing insight from the Islamic perspective. Secondly, we undertake an empirical study to assess the experience of governance within Islamic charity organizations. Our theoretical framework provides a (...) comprehensive approach to viewing organizational governance with an emphasis on governance as a mechanism for working towards social justice and the public good. However, our empirical findings reveal an ‘ethical gap’ between the ideals of the Islamic Ethical Framework and the reality of governance practice within Muslim charity organizations. We consider the implications of these findings and outline avenues for future research. (shrink)

Cross-national studies of business-related ethicality frequently have concluded that Americans possess higher ethical standards than non-Americans. These conclusions have generally been based on survey responses of relatively small convenience samples of individuals in a very limited number of countries. This article reports a study of the relationship between nationality and business-related ethicality based on survey responses from more than 6300 business students attending 120 colleges and universities in 36 countries. Two well-documented determinants of business ethics (gender and religiosity) were investigated (...) as moderators of the nationality–business ethicality relationship. The major research finding is that, while statistically significant differences were found between the business-related ethicality of American survey participants and the business-related ethicality of the non-American survey participants, the magnitudes of the differences were not substantial. The results of the study suggest that (i) more empirical cross-cultural/national research is required on business-related ethicality and (ii) previous explanations for cross-cultural/national differences in ethics need to be reconsidered before further generalizations are warranted. (shrink)

This research explores the influence of religiosity on consumer perception of, and response toward, sexual appeals. The first study (survey, national sample; n = 423) examines the relationship between religiosity and consumer response toward sexual appeals using causal modeling. Study 1 finds that high intrinsic religiosity consumers exhibit more adverse ethical judgments toward the company’s use of sexual appeals and these judgments, in turn, result in inferior attitudes and purchase intent toward the advertised brand. To confirm and expand on these (...) findings, the second study (experiment, young adult sample; n = 216) examines the influence of intrinsic religiosity on consumer response toward both sexual and nonsexual appeals. The results show that sexual appeals elicit inferior (superior) ethical judgments, attitudes, and purchase intent among consumers high (low) in intrinsic religiosity. In contrast, nonsexual appeals elicit (un)favorable responses from consumers who are (low) high in intrinsic religiosity. (shrink)

Previous studies argue that religious firms are more ethical and thus engage less in accrual earnings management. At odds with the ethical view, we use a sample of Chinese listed firms and show that firms in religious regions use more real earnings management. We postulate that besides ethics, religion also proxies for risk aversion, which motivates firms to substitute accrual earnings management with real earnings management. Consistent with this view, we show that the positive association between religiosity and real earnings (...) management is more pronounced for firms with lower litigation risk and for firms with less reputable auditors. In addition, we use a mediation model introduced by Baron and Kenny :1173–1182, 1986) to show that religiosity affects earnings management through the channel of risk aversion. We conclude that firms choose real earnings management over accrual-based earnings management because of risk aversion, rather than ethical reasons. (shrink)

Previous studies substantiate that religious social norms influence individual and organizational decisions. Using debt financing settings, we examine whether a firm’s religious environment influences outside parties’ perceptions in contracting with the firm. We document that firms located in the more religious areas use less debt financing and receive better credit ratings. Bond investors require lower yields and impose fewer covenants on such firms. Using the 2002 revelation of sex abuse by Catholic priests as an exogenous shock, we verify that these (...) findings are not driven by endogeneity issues. Our study highlights the role of social norms in financial transactions. (shrink)

This study explores cultural influence on corporate behavior employing the case of merchant guild culture in China and further the moderating role of Marketization. Using hand-collected data on merchant guild culture, we find that merchant guild culture is significantly negatively associated with owner-manager agency costs, suggesting that merchant guild culture in ancient China still has its continuous and remarkable effects on managerial behavior in contemporary corporations. This finding also implies that merchant guild culture motivates managers to upgrade the efficiency of (...) controlling operating costs, reduces agency conflicts between management and shareholders, and eventually mitigates owner-manager agency costs. Moreover, provincial Marketization level attenuates the negative association between merchant guild culture and owner-manager agency costs. Above results are robust to a variety of alternative measures of merchant guild culture and owner-manager agency costs. Furthermore, our findings are still valid after controlling for the potential endogeneity between merchant guild culture and owner-manager agency costs. (shrink)

In the Chinese stock market, controlling shareholders often use inter-corporate loans to expropriate a great amount of cash from listed firms, through a process called “tunneling.” Using a sample of 10,170 firm-year observations from the Chinese stock market for the period of 2001–2010, I examine whether and how Buddhism, China’s most influential religion, can mitigate tunneling. In particular, using firm-level Buddhism data, measured as the number of Buddhist monasteries within a certain radius around Chinese listed firms’ registered addresses, this study (...) provides strong evidence that Buddhism intensity is significantly negatively associated with tunneling. This finding is consistent with the view that Buddhism has important influence on corporate behavior and can serve as a set of social norms and/or an alternative mechanism to mitigate controlling shareholders’ unethical tunneling behavior. In addition, my findings also reveal that the negative association between Buddhism intensity and tunneling is attenuated for firms that have high analyst coverage. The results are robust to various measures of Buddhism intensity and a variety of sensitivity tests. (shrink)

Micro and small businesses contribute the majority of business activity in the most developed economies. They are typically embedded in local communities and therefore well placed to influence community wellbeing. While there has been considerable theoretical and empirical analysis of corporate citizenship and corporate social responsibility (CSR), the nature of micro-business community responsibility (mBCR) remains relatively under-explored. This article presents findings from an exploratory study of mBCR that examined the approaches, motivations and barriers of this phenomenon. Analysis of data from (...) 36 semi-structured interviews with micro-business owner-operators in the Australian city of Brisbane revealed three mBCR approaches, suggesting an observable mBCR typology. Each mBCR type was at least partly driven by enlightened self-interest (ESI). In addition to a pure ESI approach, findings revealed ESI combined with philanthropic approaches and ESI combined with social entrepreneurial approaches. The combination of doing business and doing good found amongst participants in this study suggests that many micro-business owner-operators are supporters of their local communities and, therefore, driven by more than profit. This study provides a fine-grained understanding of micro-business involvement in community wellbeing through a lens of responsible business behaviour. (shrink)

This research explores the interplay of individual, organisational and institutional variables that produce the current pattern of social responsibility practices within a specific religious organisation, namely the Church of England. By combining elements primarily of neo-institutional theory with Bourdieu’s theory of practice, we construct a theoretical framework to examine the extent to which social responsibility activity is modified or informed by a distinctive faith perspective. Given that neo-institutional theory predicts a convergence of structures and practices between different organisations operating in (...) the same institutional sector, this research draws on a single case study focusing on social responsibility activity in six different Church of England dioceses and shows that the opposite is actually the case: there is evidence of a significant degree of divergence in terms of organisational practice within the same institutional structure. Reasons for that were found to be the impact of human agency and loose institutional structures. This paper thus contributes to the understanding of social responsibility in religious organisations by exploring the dynamics between institutional pressures, organisational context and individual agents operating in the field of faith-based social responsibility. It thereby also contributes to neo-institutional theory. (shrink)

We extend research on the effects of local audit office characteristics on audit quality by investigating whether audit offices in highly religious U.S. Metropolitan Statistical Areas exhibit going concern decisions that reflect heightened professional skepticism relative to audit offices in less religious MSAs. Prior research links religiosity to risk aversion and ethical development and suggests audit practice offices in more religious MSAs are more likely to issue going concern opinions because they will assess the effects of mitigating factors in a (...) more skeptical manner. Our results indicate that audit practice offices located in highly religious MSAs are more likely to issue going concern audit opinions, consistent with a more skeptical assessment of mitigating factors. Additional tests provide direct evidence consistent with the argument that these audit offices are more risk averse in issuing going concern opinions. Our findings are relevant to auditors, audit clients, researchers, and regulators. (shrink)

In China, Buddhism and Taoism are two major religions. Using a sample of 10,363 firm-year observations from the Chinese stock market for the period of 2001–2010, I provide strong and robust evidence that religion (i.e., Buddhism and Taoism on the whole) is significantly negatively associated with owner-manager agency costs. In particular, using firm-level religion data measured by the number of religious sites within a radius of certain distance around a listed firm’s registered address, I find that religion is significantly negatively (...) (positively) associated with expense ratio (asset utilization ratio), the positive (reverse) proxy for owner-manager agency costs. This finding is consistent with the following view: religiosity has remarkable effects on the way how an individual thinks and behaves, and thereof can curb managers from unethical business practices. Moreover, my findings suggest that the negative association between religion and owner-manager agency costs is attenuated for firms with strong external monitoring mechanisms such as higher Marketization and high-quality auditors. Furthermore, after separating Buddhism from Taoism, my finding indicates that above conclusions are only available for Buddhism, suggesting that different religions may have asymmetric influence on owner-manager agency costs. Above results are robust to various measures of religiosity and a variety of robustness checks. (shrink)

Prior literature has demonstrated that religiosity is associated with a reduced acceptance of unethical business practices and financial reporting irregularities. On this premise, we examine whether religiosity, conceptualized as the degree of adherence to religious norms in the geographical area where a firm’s headquarters is located, has an impact on audit firms’ pricing decisions in the US. We measure the intensity of religiosity by the number of adherents relative to the total population in a county and demonstrate that increased religious (...) adherence operates as an institutionalized monitoring mechanism that decreases audit risk and audit costs, which is, in turn, reflected in reduced audit pricing. Additional tests suggest that the impact of religiosity on auditors’ pricing decisions is not differentiated by levels of auditor expertise but that audit fees are determined by an auditor’s relative location in a market sector and religious adherence. We conclude that religious adherence reduces the need for shareholders to bear the costs of monitoring agents, a finding which could be of importance for market participants and regulators. (shrink)

Using U.S. listed firms during the period from 1971 to 2010, this paper investigates the effect of religion on corporate cost behavior. We find that religion mitigates cost stickiness induced by agency or behavioral biases of managers. This result holds for several robustness tests that address endogeneity concerns. The mitigating effect of religion on cost stickiness is through the channel of reducing top managers’ overconfidence and optimistic bias regarding future demand change and promoting managers’ adherence to fiduciary responsibilities and consideration (...) of shareholder benefits. Further evidence shows that the reduction in cost stickiness caused by religion increases firm value. Overall, our findings suggest that religion reduces the wedge between a firm’s actual and optimal resource commitments, which helps to improve firm value and resource allocation efficiency. (shrink)

This study examines the influence of ethics instruction, religiosity, and intelligence on cheating behavior. A sample of 230 upper level, undergraduate business students had the opportunity to increase their chances of winning money in an experimental situation by falsely reporting their task performance. In general, the results indicate that students who attended worship services more frequently were less likely to cheat than those who attended worship services less frequently, but that students who had taken a course in business ethics were (...) no less likely to cheat than students who had not taken such a course. However, the results do indicate that the extent to which taking a business ethics course influenced cheating behavior was moderated by the religiosity and intelligence of the individual student. In particular, while students who were highly religious were unlikely to cheat whether or not they had taken a business ethics course, students who were not highly religious demonstrated less cheating if they had taken a business ethics course. In addition, the extent of cheating among highly intelligent students was significantly reduced if such students had taken a course in business ethics. Likewise, individuals who were highly intelligent displayed significantly less cheating if they were also highly religious. The implications of these findings are discussed. (shrink)

Prior studies suggest that firms headquartered in areas with strong religious social norms have higher ethical standards. In this study, we examine whether the ethical standards associated with local religious norms influence the M&A announcement returns. We document that the M&A announcement returns of acquirer firms increase with the strength of religious social norms in the area surrounding firms’ headquarters. We also document that the relationship is attenuated when acquirer firms have strong corporate social responsibility credentials, is amplified when public (...) trust that firms act in the best interest of stakeholders suffers a negative shock and when the M&A deal has greater economic significance for the acquirer, and manifests predominantly in the lower tail of the distribution of M&A returns. Our findings are consistent with investor assessments of firms’ ethical standards driving the relationship between local religious social norms and M&A announcement returns. We find no evidence for the competing explanation—that investor assessments of firms’ risk preferences drive the documented relationship. (shrink)

Recent research suggests there may be a link between religiousness and business ethics. This study seeks to add to the understanding of the relationship through a questionnaire survey on Malaysian Christians in business. The questionnaire taps into three different constructs. The religiousness construct is reflected in the level of participation in various common religious activities. The love of money construct is captured through the Love of Money Scale as used in Luna-Arocas and Tang [Journal of Business Ethics 50 (2004) 329]. (...) Response to 25 business vignettes taken from Conroy and Emerson [Journal of Business Ethics 50 (2004) 383] would surface ethical attitudes. A convenience sample of 300 was drawn from three large churches in the Kuala Lumpur area each with a congregation exceeding 1000 together with some representation from the smaller churches. The study finds some differences in the ethical attitudes of Malaysian Christians in business with different levels of religiousness. The study also finds that those longer in the faith are less accepting of unethical behavior. As such it can be concluded that there are ethical attitude differences between Christians in business with different levels of religiousness. This lends support to the claim of a positive relationship between religion and business ethics. The more significant finding is that even within a somewhat homogenous religious group there are different love of money profiles resulting in significant differences in ethical attitudes. This suggests that moderating money attitudes can contribute towards stronger ethical attitudes. (shrink)

Purpose The purpose of this paper is to explore the link between spirituality and corporate social responsibility from a Buddhist perspective. The paper addresses critical issues in CSR and highlights how the concept of Buddhist skilful means can be applied to tackle such issues. Skilful means is highlighted among various Buddhist concepts because it represents a context-sensitive and practical approach that can be effectively applied in CSR practice. Design/methodology/approach The paper reviews scholarly conversations on the challenges faced by CSR in (...) contemporary business management and justifies the application of Buddhist principles, especially skilful means, to tackle such issues. The paper draws upon a wide range of Buddhist teachings and Sutras to propose a Buddhist skilful means approach to CSR. Findings Studies show that CSR is a highly contextualised term. Its definition and implementation differ in various contexts. Buddhism is set apart from other religions by its flexibility in practice and contextualisation. Further, the non-attachment that sits at the heart of the skilful means allows the exploration of different CSR practices to respond effectively to local contexts. Practical implications The paper proposes practical means for CSR practices adopted from a number of Buddhist qualities and principles in response to challenges for the practice of CSR. Originality/value Buddhist concepts have yet to be discovered or included in major scholarly conversations because of their contradiction of some well-known Western concepts and theories. Skilful means, including the principle of non-attachment, is a Buddhist approach. This paper argues that skilful means is a good fit with CSR as it has practical applications that can address issues identified in relation to CSR and organisational management practices. (shrink)

In 1949 Culliton noted that "... religion has something to offer business" (Culliton, 1949, p. 265). While religion definitely does have something to offer business, especially business ethics, it is only recently that empirical research linking religiosity and business ethics has been conducted. Indeed, religiosity affords a background, against which the ethical nature of business, including marketing and consumer behavior, can be interpreted. This article offers a descriptive, rather than normative, perspective in reviewing articles linking religion to business and consumer (...) ethics. The main objective of the article being both to present some of the most significant empirical findings to date and also to encourage researchers to pursue further research in this relatively under researched area. (shrink)

In recent times, organizations have experienced consumer backlash as a result of decisions to support controversial causes. To date, little research has attempted to explain consumers’ negative response as a function of religion. This study addresses that gap in the literature and examines consumer religious commitment and Christian consumers’ conservative beliefs in the United States as motivating factors for consumer activist behavior and boycott participation. Findings from a national sample of 531 consumers suggest that consumers evaluate seller’s actions and form (...) ethical judgments. These judgments are a major explanatory variable in consumers’ voice complaints, third-party complaint intentions, and boycott intentions. (shrink)

This study develops and tests an integrated model that explains how Schwartz’s higher order personal values of Openness to Change, Conservation, Self-Transcendence and Self-Enhancement influence the ethical behavior of accountants. The study further explores the influence of ethics training, gender and religiosity on ethical behavior. A survey instrument was administered to 252 accounting students and the findings reveal that some of the higher order personal values are significant in explaining the ethical behavior of accounting students. The findings also reveal that (...) gender and ethical training influence ethical behavior, and that effect of the personal value Self-Transcendence differs depending on participant gender and also religiosity. The implications of the findings are discussed. (shrink)