This study explores the aspects of the relationship between possible indicators of CEO narcissism and fraud. Highly narcissistic CEOs undertake challenging or bold actions to obtain frequent praise and admiration. The pursuit of narcissistic supply may result in a stronger likelihood of a CEO to undertake bold actions with potential detrimental consequences for the organization. The sample consists of all S&P 500 CEOs from 1992 till 2008 with more than 3 years of tenure. The measurement of CEO narcissism is based (...) on 15 objective indicators and fits the main conceptualization of narcissism. This data collection provides a score for all S&P 500 CEOs according to their narcissistic tendencies. The Accounting and Auditing Enforcement Releases on the SEC’s website are the indicators of managerial fraud. The findings confirm the expected influence of plausible proxies for CEO narcissism on fraud by showing a positive relationship. This confirms the psychologic perspective of CEO narcissism as a potential cause of fraud. (shrink)

Abstract:This field survey focused on two constructs that have been developed to represent the ethical context in organizations: ethical climate and ethical culture. We first examined issues of convergence and divergence between these constructs through factor analysis and correlational analysis. Results suggested that the two constructs are measuring somewhat different, but strongly related dimensions of the ethical context. We then investigated the relationships between the emergent ethical context factors and an ethics-related attitude (organizational commitment) and behavior (observed unethical conduct) for (...) respondents who work in organizations with and without ethics codes. Regression results indicated that an ethical culture-based dimension was more strongly associated with observed unethical conduct in code organizations while climate-based dimensions were more strongly associated with observed unethical conduct in non-code organizations. Ethical culture and ethical climate-based factors influenced organizational commitment similarly in both types of organizations. Normative implications of the study are discussed, as are implications for future theorizing, research and management practice. (shrink)

We add texture to the conclusion of Duchon and Drake (Journal of Business Ethics, 85, 2009, 301) that extreme narcissism is associated with unethical conduct. We argue that the special features possessed by financial accounting facilitate extreme narcissism in susceptible CEOs. In particular, we propose that extremely narcissistic CEOs are key players in a recurring discourse cycle facilitated by financial accounting language and measures. Such CEOs project themselves as the corporation they lead, construct a narrative about the corporation and themselves (...) using financial accounting measures, and then reflect on how their accounting-constructed performance is perceived by stakeholders. We do not present empirical evidence about whether the use of accounting language and measures leads to unethical behaviour by extreme narcissistic CEOs — although the conclusions of Duchon and Drake (2009) suggest empirical support is probable. Rather, we focus on developing alertness to the potential for accounting, when engaged by an extremely narcissistic CEO, to be a precursor or implement of unethical behaviour. (shrink)

In recent years, theoretical and empirical developments in the area of organizational climate has provided the impetus for research concerning ethical climate. According to this latter research, ethical climate is a multi-dimensional construct which is manifested in organizations. Studies, however, have not focused on the relationship between ethical climate and ethical behavior. Furthermore, an enhanced understanding of the multi-dimensionality of ethical climate will likely advance what we know about organizational climate and culture in general. We propose further examination of ethical (...) climate by: (1) showing the conceptual relationship between ethical climate and ethical (or unethical) behavior in organizations; and (2) examining supervision as one of the principle influences on ethical climate and concomitant subordinate behavior. Finally, we explore the implications for future research on ethical climate. (shrink)

Managing ethical behavior is a one of the most pervasive and complex problems facing business organizations today. Employees' decisions to behave ethically or unethically are influenced by a myriad of individual and situational factors. Background, personality, decision history, managerial philosophy, and reinforcement are but a few of the factors which have been identified by researchers as determinants of employees' behavior when faced with ethical dilemmas. The literature related to ethical behavior is reviewed in this article, and a model for understanding (...) ethical behavior in business organizations is proposed. It is concluded that managing ethics in business organizations requires that managers engage in a concentrated effort which involves espousing ethics, behaving ethically, developing screening mechanisms, providing ethical training, creating ethics units and reinforcing ethical behavior. (shrink)

A framework is presented for studying ethical conduct in public accounting practice. Four levels of analysis are distinguished: individual, local office, multi-office firm and professional institute. Several propositions are derived from the framework and discussed: (1) The effects of ethical vs. unethical behavior on an accountant's prospects for advancement are asymmetrical in nature; (2) the way individuals perceive or frame the decision problem at hand will make an ethical response more or less likely; (3) the economic incentives present in competitive (...) markets influence the work goals of firms and offices, and lead to ethical dilemmas for individuals; and (4) initiatives at the firm or institute level aimed at compliance with professional ethical standards will by themselves have little effect on individual ethical behavior. Research into ethical behavior of practitioners will capture self-conscious and biased responses unless it is designed so as to permit indirect observation and recording of spontaneous comments. To assure valid research findings, practitioners should be interviewed and their motives assessed indirectly. A longitudinal approach is recommended, beginning with students who are choosing an accounting career. Two types of questions for use in these interviews are described. (shrink)

Ethics in business has been an increasingly controversial and important topic of discussion over the last decade. Debate continues about whether ethics should be a part of business, but also includes how business can implement ethical theory in day-to-day operations. Most discussions focus on either traditional moral philosophy, which offers little of practical value for the business community, or psychological theories of moral reasoning, which have been shown to be flawed and incomplete. The theory presented here is called the Developmental (...) Self-Valuing Theory, and adapts the general psychological theory of Albert Bandura for ethics in business. In this theory, individuals first learn moral values from associations with others who are significant in their lives. Secondly, self-regulation is learned through a process of self-observation, self-judgment and self-reaction. Thirdly, the individual must believe that he can act ethically. Situational constraints and inducements, as well as positive and negative consequences for specific behaviors, will also affect the level of ethical performance. Each of these elements is examined and combined to achieve a practical method for increasing the level of ethics in corporate activity through selection, training and situational enhancement. (shrink)

Victor and Cullen (1987, 1988) developed a typology of ethical climates based upon the level of moral development of the work group (egoism, benevolence and principled a la Kohlberg, 1981) and the locus of analysis utilized in reaching decisions (individual, local, cosmopolitan). Building on this typology, data were obtained from a high technology company for the purpose of empirically extending the examination of the number of ethical climates that exist and portraying the relationship between ethical climates and the ethical dimension (...) of decisions.When faced with decisions posing various types of ethical dilemmas, most respondents indicated they would take the ethical path. The one exception involved bribery where respondents were about equally likely to make or withhold payment. One climate guided by laws/professional codes accounted for over half of the respondents. Several climates accounted for less than ten percent of the respondents. (shrink)

Called by Karl Barth the brilliant Ethics of Dietrich Bonhoeffer, this book is finally being recognized as Bonhoeffers magnum opus and one of the most important works of Christian ethics of the last century.

Although organizational commitment continues to interest researchers because of its positive effects on organizations, we know relatively little about the effects of the ethical context on organizational commitment. As such, we contribute to the organizational commitment field by assessing the effects of ethical climates (Victor and Cullen, 1987, 1988) on organizational commitment. We hypothesized that an ethical climate of benevolence has a positive relationship with organizational commitment while egoistic climate is negatively related to commitment. Results supported our propositions for both (...) a benevolent climate and an egoistic climate. We also hypothesized that a principled climate is positively related to organizational commitment for professional workers but has no relationships for nonprofessional workers. Results supported this hypothesis. (shrink)

This study examines the influence of ethical value congruence on a manager sample's attitudes and behaviors using polynomial regression analysis. The results indicate a general lack of support for congruence effects. However, main effects of perceived organizational ethical values are found for all outcomes; how managers perceive their organization's values is directly associated with organizational commitment, job satisfaction, perceived procedural justice, adaptive behaviors, and turnover intentions. Implications for the impact of ethical values are drawn from the findings.

In spite of an increasing number of studies on ethical climate, little is known about the antecedents of ethical climate and the moderators of the relationship between ethical climate and work outcomes. The present study conducted firm-level analyses regarding the relationship between chief executive officer (CEO) ethical leadership and ethical climate, and the moderating effect of climate strength (i.e., agreement in climate perceptions) on the relationship between ethical climate and collective organizational citizenship behavior (OCB). Self-report data were collected from 223 (...) CEOs and 6,021 employees in South Korea. The results supported all study hypotheses. As predicted, CEOs' self-rated ethical leadership was positively associated with employees' aggregated perceptions of the ethical climate of the firm. The relationship between ethical climate and firm-level collective OCB was moderated by climate strength. More specifically, the relationships between ethical climate and interpersonally directed collective OCB and between ethical climate and organizationally directed collective OCB were more pronounced when climate strength was high than when it was low. Theoretical and practical implications of these findings are addressed herein. (shrink)

The American Institute of certified public accountants (AICPA) has promulgated a Code of Professional Conduct , which has served as the primary ethical standard for public accountants in the United States for more than 20 years. It is now out of date and needs to be replaced with a code of ethics. Just as U.S. generally accepted accounting principles are being migrated toward “principles-based accounting” as part of a convergence with international financial reporting standards, a similar process needs to occur (...) with ethics. This article organizes the primary rules of the AICPA Code around five essential virtues: objectivity, integrity, inquisitiveness, loyalty, and trustworthiness. These virtues correspond to the general principles set forth in the Code of Ethics for Professional Accountants of the International Federation of Accountants (IFAC). From this virtue ethics perspective, various rules of the AICPA Code are critiqued as being inadequate at best, and poorly crafted at worst. The article concludes with the proposition that principles-based ethics serves the profession and the financial reporting process better than the current rules-based approach. (shrink)

This study examines the influence of ethical fit on employee attitudes and intentions to turnover. The results of this investigation provides support for the conjecture that ethical work climate is an important variable in the study of person-organization fit. Ethical fit was found to be significantly related to turnover intentions, continuance commitment, and affective commitment, but not to job satisfaction. Results are discussed in regard to some of the affective and cognitive distinctions among satisfaction, commitment, and behavioral intentions.

This paper is an attempt to address the limited amount of research in the realm of organizational ethical climate in the not-for-profit sector. The paper draws from Victor and Cullen's (1988) theoretical framework which, combines the constructs of cognitive moral development, ethical theory, and locus of analysis. However, as a point of departure from Victor and Cullen's work, the authors propose an alternative methodology to extract ethical climate dimensions based on theoretical considerations. Using the Ethical Climate Questionnaire (ECQ), an exploratory (...) factor analysis is conducted followed by a confirmatory factor analysis using LISREL. The resulting five dimensions are labelled as: individual caring, machiavellianism, independence, social caring, and law and code. Findings provide a somewhat disparate perspective of the ethical climates in a not-for-profit context. First, there is a more discriminating perception of benevolent climate than its for-profit counterpart. Second, the dimensions are polarized between the individual and the cosmopolitan loci of analysis. These findings are then discussed with implications and direction for future research. (shrink)

The concept of organizational justice is important to understanding and predicting organizational behavior. A significant development in the research literature has been the separation of distributive and procedural justice. While much of the research has focused on negative outcomes, this research attempted to verify the presence of both forms of justice in the context of positive outcomes. Subjects completed an instrument designed to measure their perceptions of distributive and procedural justice. The subjects also reported their satisfaction and sense of fairness (...) with their salary increases, their belief that the procedures to award the increases had been followed, and their level of information and agreement regarding the salary program. These measures, along with size of salary increase and gender were examined to determine their impact on the subjects' perceived level of justice. The data support the existence of the two distinct forms of justice, but suggest that procedural justice may, in turn, branch out into two aspects. One category involves being informed, and a second appears to deal with acceptance of procedures. A series of relationships are then considered. Significant gender effects were non-existent. (shrink)

This paper studies how salespeople make ethical decisions. For this purpose a structural model has been developed which configures how the organization's environment, the organizations's climate, and personality traits affect ethical decision making. Internal communication and the choice of a control system especially affect ethical decision making. Internal communication also affects the attraction of salespeople with unethical personality traits (Machiavellism), while the control system affects the ethical climate. Ethical climate and salespeople's personality traits also affect the ethical decision making. In (...) fact the study shows that ethical decision making can be influenced by management. (shrink)

The purpose of this study was to determine if there is a relationship between the ethical climate of the organization and the development of person-organization fit. The relationship between an individual's stage of moral development and his/her perceived ethical work environment was examined using a sample of 86 working students. Results indicate that a match between individual preferences and present position proved most satisfying. Subjects expressing a match between their preferences for an ethical work climate and their present ethical work (...) climate indicated that they were less likely to leave their positions. (shrink)

This study examines the effects of ethical pressure on management accountants' perceptions of organizational-professional conflict, and related work outcomes. It was hypothesized that organizational pressure to engage in unethical behavior would increase perceived organizational-professional conflict, and that this perceived conflict would reduce organizational commitment and job satisfaction, and increase the likelihood of employee turnover. A survey was mailed to a random sample of Certified Management Accountants to assess perceptions of the relevant variables. The results of a structural equations model indicated (...) that, as hypothesized, ethical pressure was associated with higher levels of perceived organizational-professional conflict. Also as hypothesized, higher levels of conflict were associated with lower levels of organizational commitment and job satisfaction. Finally, lower levels of commitment and satisfaction were associated with higher turnover intentions. (shrink)

Organizational participants learn that "getting ahead" in organizational life comes from dramatizing a fantasy about the organization's perfection. The fantasy is the return to narcissism, in which the organization and its highest participants are seen as the center of a loving world. Since the return to narcissism is impossible, orienting the organization to the dramatization of this fantasy means that the organization loses touch with reality. The result is organizational decay-a condition of systemic ineffectiveness. Organizational decay is illustrated through the (...) case of General Motors. Specific dimensions considered are: commitment to bad decisions; advancement of participants who detach themselves from reality and discouragement of reality-oriented participants who are committed to their work; creation of the organizational jungle; isolation of management; development of a hostile orientation to the environment; transposition of work and ritual; loss of creativity; dominance of the financial staff; development of cynicism or the loss of reality; and overcentralizatior. Organizational decay may be compared with the consequences of hubris. (shrink)

The Christian does not live in a vacuum, says the author, but in a world of government, politics, labor, and marriage. Hence, Christian ethics cannot exist in a vacuum what the Christian needs, claims Dietrich Bonhoeffer, is concrete instruction in a concrete situation. Although the author died before completing his work, this book is recognized as a major contribution to Christian ethics. The root and ground of Christian ethics, the author says, is the reality of God as revealed in Jesus (...) Christ. This reality is not manifest in the Church as distinct from the secular world such a juxtaposition of two separate spheres, Bonhoeffer insists, is a denial of God's having reconciled the whole world to himself in Christ. On the contrary, God's commandment is to be found and known in the Church, the family, labor, and government. His commandment permits man to live as man before God, in a world God made, with responsibility for the institutions of that world. (shrink)

Every profession requires special knowledge and skills, and each professional is expected to possess certain essential personal qualities. Likewise, in the accounting profession, accountancy students need to possess certain essential personal qualities that their employers look for. The growing concern over the ethics of professionals makes it important consider the perceptions of the public, students, and accountants of the values of accounts in the working world.A questionnaire was given to a sample population of 500 which included the public, accounting students, (...) and accountants. The questionnaire was designed to examine the personal qualities of accountants. From this study, the perceptions of the personal qualities of accountants are that accounts should be ethical and have integrity. These perceptions reflect the importance of ethics in the accounting profession. On other qualities, the public differ in perception from that of the students and accountants. (shrink)

Past research has focused on individual culpability with the assumption that individuals will further their own self interest over that of the organization, given an appropriate opportunity. In contrast, this research shifts the focus from individual motivation to the influence of the formal and informal control systems of organizations on ethical behaviours. An open-ended interview approach was used to collect data. It was found that pressures within the informal system were the dominant influence in the resolution of ethical issues. The (...) dominance of the informal system, however, varies according to the economic position of the organization. (shrink)

Extreme narcissistic organizations are unable to behave ethically because they lack a moral identity. While such organizations are not necessarily unethical intentionally, they become self-obsessed and use a sense of entitlement, self-aggrandizement, denial, and rationalizations to justify anything they do. Extreme narcissistic organizations might develop formal ethics programs, but such programs will have little effect on behavior.

This study investigated employee perceptions of ethical climates in a sample of Russian organizations and the relationship between ethical climate and behaviors believed to characterize successful managers. A survey of managerial employees in Russia (n = 136) indicates that "rules" was the most reported and "independence" was the least reported ethical climate type. Those who perceived a strong link between success and ethical behavior report high levels of a "caring" climate and low levels of an "instrumental" climate. Implications for practitioners (...) and researchers are discussed. (shrink)