Providing a vibrant four-color design, market-leading BUSINESS ETHICS: ETHICAL DECISION MAKING AND CASES, Ninth Edition, thoroughly covers the complex environment in which managers confront ethical decision making. Using a proven managerial framework, this accessible, applied text addresses the overall concepts, processes, and best practices associated with successful business ethics programs--helping readers see how ethics can be integrated into key strategic business decisions. Thoroughly revised, the new ninth edition incorporates coverage of new legislation affecting business ethics, the most up-to-date examples, and (...) the best practices of high-profile organizations. It also includes 20 all-new or updated original case studies. (shrink)

The discussion about the relationship between tone at the top and financial reporting practices has been primarily focused on the oversight role played by the board of directors and other structural elements of corporate governance. Another relevant determinant of tone at the top is the corporate narrative language, since it is a fundamental way in which the chief executive officer enacts leadership. In this study, we empirically explore the association between financial reporting aggressiveness and five thematic indicators capturing different traits (...) of ethical leadership from 535 annual letters to shareholders. We find that aggressive financial reporting is positively associated with CEO letters using a language which is resolute, complex, and not engaging. Our empirical findings highlight the importance of examining discretionary corporate narratives for the auditing process and the role of tone at the top in influencing accounting practices. (shrink)

Corporate codes of conduct are a practical corporate social responsibility (CSR) instrument commonly used to govern employee behavior and establish a socially responsible organizational culture. The effectiveness of these codes has been widely discussed on theoretical grounds and empirically tested in numerous previous reports that directly compare companies with and without codes of conduct. Empirical research has yielded inconsistent results that may be explained by multiple ancillary factors, including the quality of code content and implementation, which are excluded from analyses (...) based solely on the presence or absence of codes.This study investigated the importance of code content in determining code effectiveness by examining the relationship between code of conduct quality and ethical performance. Companies maintaining high quality codes of conduct were significantly more represented among top CSR ranking systems for corporate citizenship, sustainability, ethical behavior, and public perception. Further, a significant relationship was observed between code quality and CSR performance, across a full range of ethical rankings. These findings suggest code quality may play a crucial role in the effectiveness of codes of conduct and their ability to transform organizational cultures.Future research efforts should transcend traditional comparisons based on the presence or absence of ethical codes and begin to examine the essential factors leading to the effective establishment of CSR policies and sustainable business practices in corporate culture. (shrink)

This study examines the similarities and differences in pre- and post-Sarbanes-Oxley corporate ethics codes and codes of conduct using the framework of structuration theory. Following the passage of the Sarbanes-Oxley (SOX) legislation in 2002 in the United States, publicly traded companies there undertook development and revision of their codes of ethics in response to new regulatory requirements as well as incentives under the U.S. Corporate Sentencing Guidelines, which were also revised as part of the SOX mandates. Questions that remain are (...) whether these new or revised codes are effective means of communicating changed ethical foci and attitudes in organizations. Centering resonance analysis (CRA) is used to identify differences and similarities across time and industries by analyzing word networks of 46 pre- and post-SOX corporate codes of ethics. Analyses focus on content and structure of generated word networks as well as resulting factors that emerged from the texts. Results are interpreted from the structuration perspective that content and structure of codes are constrained and enabled by system structures while they function to produce and reproduce those structures. Results indicate that corporate codes of ethics are formal discourses of ethics, laws, and control. Code structure has changed across time, with an increased emphasis on compliance in post-SOX codes. Implications for research and practice are discussed in light of findings. (shrink)

The study examines employee, managerial, and ethics officer perceptions regarding their companies codes of ethics. The study moves beyond examining the mere existence of a code of ethics to consider the role that code content and code process (i.e. creation, implementation, and administration) might play with respect to the effectiveness of codes in influencing behavior. Fifty-seven in-depth, semi-structured interviews of employees, managers, and ethics officers were conducted at four large Canadian companies. The factors viewed by respondents to be important with (...) respect to code effectiveness include: provisions of examples; readability; tone; relevance; realism; senior management support; training; reinforcement; living up to standards; reporting requirement; anonymous phone line; communicating violations; and enforcement. The factors found to be potentially important include: justification for provisions; employee involvement; and sign-off requirements. Factors found not to be important include: objectives for the code; prior distribution; testing; and relating ones performance review to compliance with the code. (shrink)

Globalization theories posit organizational convergence, suggesting that Codes of Ethics will become commonplace and include greater consideration of global issues. This study explores the degree to which the Codes of Ethics of 157 corporations on the Global 500 and/or Fortune 500 lists include the "third generation" of corporate social responsibility. Unlike first generation ethics, which focus on the legal context of corporate behavior, and second generation ethics, which locate responsibility to groups directly associated with the corporation, third generation ethics transcend (...) both the profit motive and the immediate corporate environment. Third generation ethics are grounded in responsibilities to the larger interconnected environment. The results of the study suggest convergence, insofar as Codes of Ethics are becoming standard communication features of corporations across region and industrial sector but still manifest a primary concern with profits and those behaviors which are mandated by law. Only corporations headquartered in the European Union demonstrate a significant degree of global consciousness and reflexivity. However, there is some evidence that third generation ethics and thinking are becoming part of the corporate landscape. More then three quarters of the corporations made at least some reference to third generation ethics. (shrink)

Ethics has been identified as an important factor that potentially affects auditors’ professional skepticism. For example, prior research finds that auditors who are more concerned with professional ethics exhibit greater professional skepticism. Further, the literature suggests that professional skepticism may lead the auditor to more vigilantly resist the client’s position in financial reporting disputes. These reporting disputes are generally resolved through negotiations between the auditor and client to arrive at the final reported amounts. To date, the role that professional skepticism (...) potentially plays in the negotiation process has been relatively unexplored. The literature prior to the enactment of Sarbanes–Oxley (SOX) suggests that auditors are more likely to approve a client position when the matter in dispute is relatively ambiguous and when changing the client’s position will result in the client failing to meet analysts’ expectations. However, changes resulting from SOX have led auditors to be more vigilant and therefore results found in the pre-SOX environment may not hold in the current environment where auditors are held more accountable for their actions. Results from an experiment with experienced audit managers and partners suggest that in the post-SOX climate, auditors’ negotiations do not appear to be substantively influenced by management being able to meet or beat forecasts. Moreover, we find that when auditors exhibit heightened professional skepticism, they are more ethical by being conservative and they stand more resolute than when auditors do not exhibit heightened professional skepticism. Finally, although we do not find a main effect for the influence of earnings forecast, we do find a significant interaction between earnings forecast and heightened professional skepticism. Implications for practice and research are then presented. (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 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)

Regulatory responses to the business failures of 1998–2001 framed them as a general failure of governance and ethics rather than as firm-specific problems. Among the regulatory responses are Section 406 of Sarbanes–Oxley Act, SEC, and exchange requirements to provide a Code of Ethics. However, institutional pressures surrounding this regulation suggest the potential for symbolic responses and decoupling of response from organizational action. In this article, we examine Codes of Ethics for a stratified sample of 75 U.S. firms across five distinct (...) industries and find that content and language converge across organizations in ways undesired by the regulators, and that language is used to minimize the effects of the Code on constraining organizational behavior. There is, however, a noteworthy exception in the sections of the Codes dedicated the ethics of financial reporting. Although this material still contains legalistic boilerplate information, it does offer concrete guidance and emphatic language pertaining to the need to maintain the integrity of reporting practices. This suggests that the corporate understanding of the source of the failures is one of fraudulent financial reporting. Aside from the matter of financial reporting, the vague and stylized content of the Codes was a predicted response and constitutes a rational response to the regulation. The regulation, however, clearly states the belief that Codes should vary from firm to firm and that individual firms should determine the specific content of a Code. Aside from financial reporting matters, the observed result suggests that regulatory efforts may have failed to instigate corporate change in attitudes toward and enforcement of higher ethical standards by corporate actors. (shrink)