We investigate the regulatory sanctions imposed on independent directors for their firms’ financial frauds in China. These regulatory sanctions are prima-facie evidence of significant lapses in business ethics. During the period 2003–2010, 302-person-time independent directors were penalized by the regulator, and the two stock exchanges. We find that the independent directors with accounting experiences are more likely to be penalized by the CSRC, though they do not suffer more severe penalties than do the other sanctioned independent directors. We also find (...) that independent directors suffer less severe penalties than do the insider directors. These results are consistent with the hypothesis that the sanctions on independent directors are tied to their assumed ethical and legal responsibilities. Following a regulatory sanction, penalized independent directors experience a significant decline in the number of other board seats held. However, they can gain board seats in better quality firms. We find that interlocked firms that share penalized independent directors with the fraud firm do not suffer from a valuation decline. Overall, our results suggest that regulatory sanctions have not triggered further sanctions on the penalized directors in the labor market but they have, instead, created a disincentive for these directors to serve on the company boards of high-risk firms. (shrink)

This paper is the Introduction to the Special Issue comprising a selection of papers submitted to the 19th IESE International Symposium on Ethics, Business and Society. The main topic of the Symposium was “Ethical Challenges in Strategic Management.” The paper presents the rationale and context of the Symposium. We begin with a brief historical overview of the evolution of the relationship between ethics and strategy. We propose four pillars that are at the core of a definition of strategy and elaborate (...) on how ethics can contribute to strategy. We present the six papers that make up this selection within the framework of the four aspects introduced in the previous section. We conclude with some proposals for further research that consider the content of the papers. (shrink)

In the management academic research, academic advancement, job security, and the securing of research funds at one’s university are judged mainly by one’s output of publications in high impact journals. With bogus resumes filled with published journal articles, universities and other allied institutions are keen to recruit or sustain the appointment of such academics. This often places undue pressure on aspiring academics and on those already recruited to engage in research misconduct which often leads to research integrity. This structured review (...) focuses on the ethics and integrity of management research through an analysis of retracted articles published from 2005 to 2016. The study employs a structured literature review methodology whereby retracted articles published between 2005 and 2016 in the field of management science were found using Crossref and Google Scholar. The searched articles were then streamlined by selecting articles based on their relevance and content in accordance with the inclusion criteria. Based on the analysed retracted articles, the study shows evidence of ethical misconduct among researchers of management science. Such misconduct includes data falsification, the duplication of submitted articles, plagiarism, data irregularity and incomplete citation practices. Interestingly, the analysed results indicate that the field of knowledge management includes the highest number of retracted articles, with plagiarism constituting the most significant ethical issue. Furthermore, the findings of this study show that ethical misconduct is not restricted to a particular geographic location; it occurs in numerous countries. In turn, avenues of further study on research misconduct in management research are proposed. (shrink)

Business ethics is one of the most significant demands made by institutional and individual investors, who usually require the participation of the board of directors in the planning and implementation of ethical behaviour in corporations. This is done by drawing up an ethics code and then monitoring its fulfilment. This study has a dual objective: first, to analyse the role played by the composition of the board of directors, and by that we mean its independence and the diversity of its (...) members, on the implementation and scope of an EC, and, second, to detect whether the corporate governance system moderates the level of involvement of the board in ethical issues. The findings obtained from a data panel sample made up of 760 listed companies from 12 countries for the years 2003–2009 show that the largest companies with large-sized and diverse boards implement the most developed ECs. Nevertheless, the extent of involvement of the independent directors is conditioned by the level of shareholder orientation characteristic of the system of CG in the corporation’s country of origin. (shrink)