How Leaders Influence (un)Ethical Behaviors Within Organizations: A Laboratory Experiment on Reporting Choices

Abstract

We use a lab experiment to examine whether and how leaders influence workers’ (un)ethical behavior through financial reporting choices. We randomly assign the role of leaders or workers to subjects, who can choose to report an outcome via automatic or self-reporting. Self-reporting allows for profitable and undetectable earnings manipulation. We vary the leaders’ ability to choose the reporting method and to punish workers. We show that workers are more likely to choose automatic reporting when their leader voluntarily does so and can assign punishment. Even workers who choose self-reporting tend to cheat less when their leader chooses automatic reporting. Nonetheless, most leaders do not opt for automatic reporting in the first place: they often choose self-reporting and punish workers who rather choose automatic reporting. Collectively, our results reveal a dual effect of leadership on ethical behaviors in organizations: workers behave more ethically if their leader makes ethical choices, but often leaders do not make ethical choices in the first place. Hence, leading by example can backfire.

А Зошто Да Не? Контекстуални И Индивидуални Разлики Во Коруптивните Активности

“…Се отвораат многу прашања за поврзаноста на коруптивното однесување со организациската етика, верувањата и вредностите како дел од културата, перципираните норми и индивидуалните разлики. Амор и соработниците (Amore, Garofalo and Guerra, 2022) со лабораториски експеримент се обиделе да откријат дали и како можат лидерите да поттикнат неетичко однесување кај вработените. Нивните наоди укажуваат на двоен ефект на лидерството врз етичкото однесување во рамките на организациите, работниците се однесуваат поетички кога нивните лидери прават етички избори, но лидерите не прават етички избори по секоја цена.…”

The Effect of Size, Tangibility, Debt Maturity, and Foreign Ownership on Investment Efficiency by Family Ownership as Moderating Factor

“…In reviewing the relationship of financial ratios such as size, debt maturity, tangibility, and foreign ownership with investment efficiency, there are moderating factors. One factor that could be considered to become moderating variable is the composition of family ownership (FO) as a manifestation of the concentration of ownership (Amore et al, 2022). This research purpose is to: (1) Produce evidence empirically in order to test the effect of Size against investment efficiency.…”

Regional variation in tax compliance and the role of culture

“…Hence, while this evidence provides a baseline argument to further investigate this topic, it does not allow us to develop precise hypotheses on how culture could affect the sensitivity of individuals in the north versus south of Italy to changes in tax structures. As is common in these cases, we adopt an inductive approach: we let results emerge from our data without any prior theory or hypothesis to be tested (Amore et al, 2022).…”