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The purpose of this study is to adopt the upper echelon theory to analyze the effect of chief executive officer (CEO) transformational leadership on organizational ethical culture and its subsequent impact on firm performance. The study also integrates the knowledge from the structure–conduct–performance paradigm to test whether the high degree of competitive intensity that firms experience could weaken the effect of organizational ethical culture on firm performance.

Online survey data were obtained from firms in Thailand that were randomly selected from the directory provided by the Department of Business Development (n = 200). Partial least squares structural equation modeling was used to analyze the data.

Organizational ethical culture significantly meditates the effect of CEO transformational leadership on firm performance. Moreover, the moderating effect analysis illustrates that the positive effect of organizational ethical culture on firm performance tends to be lower when firms have a high level of competitive intensity in the market.

Overall, this study adds new knowledge to the literature by showing that, although ethical culture created by transformational leaders can lead to high firm performance, the market environment in terms of competitive intensity could mitigate this benefit.

The chapter first draws concepts underlying legitimacy theory (Suchman, 1995) to provide a basis to understand alternative approaches to the development of ethical cultures in global organization. The chapter then illustrates the institutionalization of Codes of Ethics through a “management” approach drawing from Simon’s Levers of Control as a framework to contextualize experiences of a large global conglomerate. The chapter adopts the case approach, applying the case of the Tata Group to highlight the integration of external institutions into the institutionalization process. The management of business ethics (MBE) can provide a basis to institutionalize ethics in global firms to create an internal culture consistent with ethical goals of the corporations that may also be different from the external environment. The MBE includes the application of managerial techniques and information technology to institutionalize ethics in organizational culture. Management Accountants can have a significant role in supporting this endeavor, given their expertise in measurement and control. The code is only one aspect through which firms develop their identity. Information on the case was unevenly distributed. For example, there was voluminous information on the code and its implementation. Therefore, some subjectivity was necessary in selecting relevant items. The chapter, to my knowledge, provides unique insights into the theoretical and practical aspects of institutionalizing ethics in corporate cultures using Codes of Ethics.

The purpose of this paper is to address the impact of ethical culture on audit quality under conditions of time budget pressure. The study also tests the relationship between ethical culture and time budget pressure.

The study is based on a field survey of financial auditors employed by audit firms operating in Sweden.

The study finds relationships between three ethical culture factors and reduced audit quality acts. The ethical environment and the use of penalties to enforce ethical norms are negatively related to reduced audit quality acts, whereas the demand for obedience to authorities is positively related to reduced audit quality acts. Underreporting of time is not related to ethical culture, but is positively related to time budget pressure. Finally, the study finds a relationship between two ethical culture factors and time budget pressure, indicating a possible causal relationship, but ethical culture does not mediate an indirect effect of time budget pressure on reduced audit quality acts.

This is the first study to report the effect of ethical culture on dysfunctional auditor behavior using actual self‐reported frequencies of reduced audit quality acts and underreporting of time as data.

The purpose of this paper is to provide evidence on underreporting of time (URT) by audit partners and the factors that drive URT at their level. In particular the study tests the relationship between URT and the following variables: pressures perceived by auditors related to audit budgets, the ethical acceptability of URT, the influence of peers and superiors on the resolution of ethical conflicts, and organisational ethical culture. A deeper analysis of URT practices is necessary, as failing to correctly report the total hours worked by audit partners poses a threat to audit quality, and can have a detrimental effect on individual auditors, audit firms, and even the auditing profession itself.

A multiple regression data analysis was conducted, based on 84 responses from Spanish audit partners working in small- and medium-sized audit firms.

The results reveal that URT is affected by the pressures perceived by auditors related to audit budgets, the ethical acceptability of URT, and the influence of peers and superiors on the resolution of ethical conflicts.

This study contributes to international literature on the organisational context of audit firms by analysing URT from the perspective of audit partners. It also has practical implications, as it focuses on understanding the beliefs and behavioural patterns of audit partners, which is critical to proposing mechanisms for avoiding dysfunctional behaviour at all levels of audit firms.

This study explores auditors’ professional attitudes and behaviours. It tests the influence of public interest commitment, independence enforcement beliefs and organisational ethical culture on auditors’ acceptance of and engagement in practices that compromise their objectivity. The study is based on survey responses of 122 Spanish auditors. To analyse the combined effect of the variables under study, variance-based structural equation modelling (partial least squares, PLS) was employed. The results suggest that the regulatory efforts to improve auditors’ behaviours by enforcing independence rules have been internalised by auditors. The results also reinforce the need to instil the societal responsibilities of professional auditors, since auditors’ public interest commitment is related to their ethical decision making. Furthermore, this study reveals that firms’ ethical cultures influence auditors’ commitment to the public interest, as well as their ethical decision making. The study raises practical implications for auditing professionals, regulators and audit firms. Understanding auditors’ beliefs and behavioural patterns is critical to proposing mechanisms that enhance their ethical behaviours, which could ultimately enhance audit quality. The chapter contributes to the field by analysing the combined effect of the regulatory framework and organisational context on auditors’ professional values and behaviours.

To provide a practical insight into the Financial Services Authority's (FSA) “Treating Customers Fairly” (TCF) initiative for financial services firms endeavouring to implement such an approach.

This qualitative paper subjectively considers the TCF initiative in the context of the wider ethical approach to financial services by drawing an analogy with the FSA's earlier initiative in seeking to establish an ethical framework for financial services. Reference is made to recent practitioner literature and supported by key academic literature where appropriate.

The paper highlights the FSA's aim of adopting a high‐principled regulatory approach to TCF as a real alternative to highly prescriptive rules. It consider the scope of TCF and the inherent practical implications for firms seeking to implement such a policy by drawing an analogy between TCF and the ethical framework for financial services.

The paper is a useful insight into TCF from a critical, practical perspective and is part of a wider organizational cultural change debate which may be developed as the experience of the FSA and those it regulates matures.

The paper suggests that TCF is part of a greater need for the FSA and financial services firms to review their business in terms of an ethical approach, which in turn requires them to consider organizational cultural change.

The paper questions the FSA's strategic approach to embedding fairness in a firm's value system as part of TCF, rather than recognizing the TCF is a major component of the broader and more beneficial goal of changing a firms's ethical culture.

This study aims to examine the impact of corporate culture, measured by corporate social responsibility (CSR), on the likelihood and severity of corporate fraud. CSR literature indicates that corporate managers are moral actors and are obliged to exercise their discretionary decisions according to their moral standards. Based on the moral development theory, this study argues that higher managers’ ethical values reflected by higher CSR activities are less likely to commit fraud and have lower severity of fraud.

This study argues that at the firm level, corporate culture can be measured by firms’ CSR activities. Using probit, match-pair, propensity matching and Heckman regressions on a sample of 152 criminal corporate fraud cases in the USA from the US Department of Justice (DOJ) during 2000 and 2010, this study empirically examines the impact of CSR, CSR strengths and concerns scores on the likelihood and the severity of corporate fraud.

Firms with higher CSR and CSR strengths (concerns) scores have lower (higher) likelihood and lower (higher) severity of corporate fraud. This study finds that firms with higher community, employee, environment and product-related CSR have lower likelihood of fraud, and firms with higher diversity, employee, environment and product-related CSR have lower fraud severity.

Establishing a positive corporate ethical culture is essential to curb the outbreak of corporate fraud that threatens our societal norms. The findings also shed some light for investors, corporate board of directors and regulators to consider CSR as a reflection of top managers’ moral values that is negatively related to the occurrence and severity of corporate fraud.

Strengthening moral values among top executives and employees in corporations by encouraging CSR activities aid our society to alleviate future outbreak of epidemic problem for corporate fraud.

This study brings a new perspective that there is a relationship between corporate ethical culture within an organization, measured by CSR activities, and corporate fraud based on the cognitive moral development theory in organization.

This chapter proposes a research agenda for the study of large law firm culture and explains how the research would contribute to both legal ethics and organizational theory. It focuses on two sets of questions that are uniquely suited to investigation in large law firms. First: what is the significance of organizational culture, relative to that of professional networks and subgroups? To what extent does organizational membership shape lawyers’ understandings about “how things are done”? Second: how is organizational culture sustained? What are the mechanisms of cultural integration in volatile, multioffice firms? The chapter draws on a pilot study of law firm culture in one 500-lawyer firm.

Environmental degradation in emerging economies has induced stakeholder pressures on diverse firms to ensure sustainable business performance. Consequently, firms are adopting environmentally ethical cultures and reinforcing green creativity to satisfy stakeholders' environmental needs while attaining green competitive advantage, sustainable production and higher financial performance. The purpose of this study is to investigate whether corporate environmental ethics and green creativity serve as antecedents to higher competitiveness, sustainable production and financial performance, and also examine if green competitive advantage and sustainable production mediate the relationships between corporate environmental ethics, green creativity and financial performance in the context of an emerging economy.

This study using a survey approach examined data from 290 manufacturing small and medium-sized enterprises. Data were analyzed and interpreted using SmartPLS 3.0 software, a variance-based structural equation modelling technique. This modelling technique was adopted due to its suitability for predictive research models.

The findings show that corporate environmental ethics and green creativity are critical antecedents to green competitive advantage, sustainable production and financial performance. The results connote that while corporate environmental ethics and green creativity directly and robustly influence green competitive advantage, sustainable production and financial performance, their effect on financial performance is strengthened via the indirect effects of green competitive advantage and sustainable production. Contrasting past findings, corporate environmental ethics negatively related to financial performance in this study context. The findings indicate that the integration of environmental ethics and green creativity can be a unique strategy for mitigating environmental negative risks while improving green competitive advantage, sustainable production and financial performance.

The study is among the few that draws insights from organizational ethics and the natural resource-based view (NRBV) to examine the interactions between corporate environmental ethics, green creativity, green competitive advantage, sustainable production and financial performance. Drawing insights from the findings, the study provides suggestions for managers, academicians, policymakers and governments as well as highlights implications and directions for future research.

The primary role of auditors is to offer fiduciary services to society and users of financial reporting. With this role, users placed their trust and depend on the ability and judgement made by the auditors during their auditing works. However, recent financial scandals involving high profile companies frustrated the public’s expectations, particularly in Malaysia. It is claimed that auditors are not having ethical sensitivity while executing their task in mitigating fraudulent financial reporting. Therefore, this study aims to examine the influences of ethical orientation, locus of control and the firm’s ethical culture on the auditors’ ethical sensitivity in Malaysia.

This study collected primary data based on a questionnaire survey among audit firms in the Klang Valley area and registered with Malaysian Institutes of Accountants.

The results showed ethical sensitivity has a significant negative relationship with relativism and in some cases has a significant positive relationship with idealism. Moreover, it found a significant positive relationship between ethical sensitivity and ethical culture.

This paper provides benefit to the audit firms, professional bodies, policymakers and academia in understanding the factors that might increase the sensitivity of auditors in dealing with ethical issues that could lead to fraudulent financial reporting in the company.