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This study uses a budgeting experiment to examine the effects of peer influence and firm earnings position on managerial honesty. In the experiment, participants report production costs to request funds from the firm based on their actual private cost information. The firm’s earnings position is manipulated at two levels, a gain condition and an edge condition, and the authors find that participants overstate costs (i.e., are less honest) to a greater extent in the dishonest peer influence condition than in the honest peer influence condition. The authors also find that the effect of peer influence on managerial honesty is context dependent. Specifically, participants respond to both dishonest and honest peer influence in the gain condition but they do not respond to peer influence in the edge condition. This study provides evidence for honest peer influence on honesty and it highlights the role of earnings position on the effect of peer influence on honesty. Controlling the disclosure of certain peer information is not possible because individuals can learn about peer information (honest or dishonest) formally or informally. Such uncontrollable peer information may be harmful to firms. The results suggest firms that provide managers with the consequences of managerial budgeting on the firm operational outcomes can neutralize the effect of peer influence on managerial honesty when managers’ budgeting decisions significantly affect firm profits.

Purpose — The aim of this chapter is to explain the concepts of honesty and dishonesty in management and provide a general understanding why and how honesty and dishonesty may manifest in different ways.Design/methodology/approach — This conceptual chapter discusses what (dis)honesty is, which factors affect it and which consequences result from it. It is illustrated with several short examples.Findings — (Dis)honesty is a complex concept. It is not always possible to classify a certain act as honest or dishonest: sometimes, it is in the ‘grey area’. Moreover, the understanding what is honest and what is not depends on the cultural context. Thus, the term (dis)honesty may be sometimes more appropriate.Originality/value — The complexity of (dis)honesty in management (encompassing its nature, impact factors and consequences) has received relatively little research attention.

There has been a call for additional managerial accounting research that examines the effect of non-pecuniary preferences (such as those for honesty and fairness) on managerial reporting decisions.

Drawing from trait theory, agency theory, and psychological contracts theory, Kidder (2005) suggests that personality traits and perceived unfairness in the workplace both help predict detrimental workplace behaviors, with perceived fairness affecting the honesty in reporting of some individuals but not others. We test Kidder’s (2005) theory in an experimental setting where participants have opportunity and incentive to report dishonestly.

Participants’ honesty preferences and ethical values (idealism and relativism) were measured, and the fairness of the participants’ employment contracts was manipulated. As predicted, higher preferences for honesty are significantly associated with honesty in reporting, suggesting that participants make trade-offs between increasing their own wealth and acting honestly. Additionally, the perceived fairness of compensation interacted with honesty preferences and relativism to affect honesty in reporting.

The implication for practice is that while a small number of employees are likely to consistently behave in honest or self-interested ways, firms may be able to positively influence the behavior of the majority of employees by enacting policies and procedures that contribute to perceptions that compensation is fair.

These findings contribute to our understanding of non-pecuniary preferences on managerial reporting decisions.

We examine the effect of peer honesty on focal manager honesty in a budget reporting setting. We disclose peer honesty to the focal manager at three levels: no, partial, and full disclosure of the reporting behavior of the other managers in the focal managers’ cohort. In partial disclosure, only the reports of the least honest peers are disclosed to the focal manager. In full disclosure, all managers’ reports in the cohort are disclosed to the focal manager. We predict and find that disclosure of other managers’ reports leads to less honesty compared to the absence of disclosure. We show that disclosure changes the focal manager’s perceptions of what constitutes acceptable reporting behavior, such that reporting more dishonestly becomes more acceptable. Our results have implications for understanding fraud dynamics and have practical implications for the design of control systems, as they suggest that managers will use peer dishonesty to justify their own dishonesty, even when they know that only some of their peers report dishonestly.

This study investigates the effect of honesty reminders on budgetary slack. Based on self-concept maintenance theory, the authors posit that honesty reminders can reduce budgetary slack by making people more aware of their own standards of honesty, resulting in more honest behavior. Using an experimental research design, the authors find evidence that honesty reminders reduce budgetary slack. The authors also find that although penalties can similarly reduce budgetary slack, they tend to cause distrust and resentment from subordinates. Therefore, honesty reminders may be a less costly method than penalties for reducing budgetary slack.

The purpose of this study is to investigate the moderating role of honesty-humility of financial managers on aggressive financial reporting behavior.

To test the research hypotheses, a scenario-based questionnaire taken from Brink et al. (2018) was used. Using a cross-sectional survey design, the authors collected primary data of 160 financial managers of firms in Iran using structured questionnaires. The research sample selected was based on Cohen et al.’s (2000) table. To test the research hypotheses, analysis of variance was used.

The results showed that increasing honesty-humility of financial managers decreases the impact of social pressure and risk appetite interaction on aggressive financial reporting. In addition, the results of further analysis showed that reducing the honesty-humility of financial managers increases the impact of risk appetite on aggressive financial reporting. Moreover, the results indicate that reducing the honesty-humility of financial managers increases the impact of social pressure on aggressive financial reporting.

This finding provides significant evidence for auditor, managers and policymakers in Iran. Policymakers, auditor and company managers can emphasize compliance with the code of ethics, internal control and corporate governance to increase ethics and reduce negative economic consequences.

To the best of the authors’ knowledge, this is the first case in an emerging economy to survey the moderating role of honesty-humility of financial managers on aggressive financial reporting behavior. Also, this study contributes to understanding how factors at the individual, social and organizational level combine to influence financial managers’ aggressive financial reporting behavior.

The purpose of this study is to contribute to the understanding of how personality traits and leadership styles impact employee engagement.

A field study involving a total of 100 participants was conducted to investigate the relationship between honesty–humility, authentic leadership and employee engagement. Hypotheses were tested using correlation and regression analyses.

The results show that honesty–humility impacts employee engagement and that authentic leadership functions as a substitute for honesty–humility.

Further studies are necessary to examine how honesty–humility interacts with other leadership styles. Further studies can also expand the understanding of this relationship across different cultures.

Employees bring engagement to work through their individual traits but organizations can help create an environment that fosters engagement through positive leadership behavior such as authentic leadership.

This study extends the understanding of the role of individual differences beyond the established Big Five model, by adding the honesty–humility dimension. In addition, the authors examine the moderating effects of authentic leadership on the relationship between honesty–humility and engagement.

On the basis of theories of social cognition and moral identity and the meta-theoretical principle of “too-much-of-a-good-thing,” the purpose of this study is to develop and test a model that explains when and why leader honesty/humility promotes subordinate organizational citizenship behavior directed at individuals (OCBI) as mediated through subordinate moral identity centrality.

In this field study, with online surveys, multisource data were collected from 218 United States Air Force officers and their subordinates. Data were analyzed with MEDCURVE SPSS macro tools.

A nonlinear indirect effect of leader honesty/humility on subordinate OCBI through subordinate moral identity centrality was found. This conditional indirect effect occurred through a curvilinear (inverted U-shape) relationship between leader honesty/humility and subordinate moral identity centrality and a positive linear relationship between subordinate moral identity centrality and OCBI.

Cross-sectional data were collected. Future research might replicate findings using experimental and longitudinal designs.

Recruiting and selecting leaders who possess a moderate level of honesty/humility may serve as the first step in producing prosocial behavior during social interactions with subordinates.

This study extends the literature on character and leadership by applying the too-much-of-a-good-thing principle to empirically test the complex nature of the relationship between leader honesty/humility and subordinate OCBI as mediated through subordinate moral identity centrality.

The aim of this paper is to analyse the factors associated with the perception of the value honesty among Russian organisational members from selected former Soviet countries: Russia, Estonia, Latvia and Lithuania.

Using the Rokeach Value Survey, the respondents were asked to rank their own values and to speculate on how their co‐workers would rank the same values. The following analysis focused on the importance of honesty, its concurrence with speculations about co‐workers, the impact of other personal values and socio‐demographic characteristics.

One of the most important findings of this study is that value honesty is amongst the most important values for Russians, while the importance of this value was not similar for Russians living in Russia and the Baltic States. Value consensus tells us the most about how important honesty is for the focal person. Results also reveal that other personal values, namely, family security, comfortable life, imaginative, capable and broad minded help to predict the assessment of honesty.

The results of the study imply that societal influence prevails over cultural influence when the importance honesty is assessed among Russians. Also, we show that individually, value honesty is socially construed and can therefore be manipulated via changing his/her perception of social consensus rather than directly.

The originality of the paper lies in the focusing on the Russians living in different countries of former Soviet Union by analysing the importance of value honesty which plays a role in business and societal culture.

The purpose of this paper is to explore how the concept of honesty can shed light on misreporting issues in projects. Research on honesty can be useful for practitioners and researchers in project management, in order to understand and counter the withholding and distortion of relevant information from projects. In moral psychology, dishonesty is often explained as a result of moral neutralization. The paper provides an account of how neutralization can lead to dishonesty in projects.

The current study is based on a literature review of research on misreporting and dishonesty in projects, and of relevant generic studies of honesty.

The author concludes that the phenomenon of moral neutralization can explain dishonesty and misreporting in projects. Honesty can be encouraged by identifying attempts at moral neutralization, and rendering them unacceptable. At the core of this position is the view that the level of honesty amongst project members is most adequately understood and explained from a circumstance rather than a character approach.

The paper is based on a literature review, and needs to be supported by further empirical studies within project management.

The suggested primacy of a circumstance approach to honesty implies that project practitioners should be aware of the phenomenon of moral neutralization. Even people of good moral character can become involved in neutralization, in order to render misreporting acceptable. The central practical challenge can thus be to recognize tendencies of neutralization in one's own and other people's moral reasoning.

The main contribution of this paper is to introduce the concept of honesty in general, and the concept of moral neutralization in particular, to project management research and practice. The paper also suggests concrete ways to redirect attention from character to circumstances, based on more general research findings in social and moral psychology.