Abstract
This paper reports on the results of an experiment conducted with experienced corporate directors. The study findings indicate that directors employ prospective rationality cognition, and they sometimes make decisions that emphasize legal defensibility at the expense of personal ethics and social responsibility. Directors recognize the ethical and social implications of their decisions, but they believe that current corporate law requires them to pursue legal courses of action that maximize shareholder value. The results suggest that additional ethics education will have little influence on the decisions of many business leaders because their decisions are driven by corporate law, rather than personal ethics.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
References
Bansal, P. and S. Kandola: 2004, ‘Corporate Social Responsibility: Why Good People Behave Badly in Organizations’, Ivey Business Journal (March), 1–5
Bowen H. (1953) Social Responsibilities of the Businessman. Harper & Row, New York
Brief A., Dukerich J., Brown P., Brett J. (1996) What’s Wrong with the Treadway Commission Report? Experimental Analyses of the Effects of Personal Values and Codes of Conduct on Fraudulent Financial Reporting. Journal of Business Ethics 15:183–198
Brower H., Shrader C. (2000) Moral Reasoning and Ethical Climate: Not-for-profit vs. For-profit Boards of Directors. Journal of Business Ethics 26:147–167
Clement R., Krueger J. (2000) The Primacy of Self-referent Information in Perceptions of Social Consensus. British Journal of Social Psychology 39:279–299
Copeland J. (2005) Ethics as an Imperative. Accounting Horizons 19:35–43
Corporate Social Responsibility Initiative (CSRI): 2006, John F. Kennedy School of Government, Harvard University. http://www.ksg.harvard.edu/cbg/CSRI/index.html
Felo A. (2001) Ethics Programs, Board Involvement, and Potential Conflicts Of Interest In Corporate Governance. Journal of Business Ethics 32(3):205–218
Felo A. (2000) Ethics Programs, Board Oversight, and Perceived Disclosure Credibility: Was The Treadway Commission Correct About Ethics and Financial Reporting? Research on Accounting Ethics 7:157–176
Ibrahim N., Howard D., Angelidis J. (2003) Board Members in the Service Industry: An Empirical Examination of the Relationship between Corporate Social Responsibility Orientation and Director Type. Journal of Business Ethics 47:393–401
Kohlberg L., Levine C., Hewer A. (1983) Moral Stages: A Current Formulation and a Response to Critics. Karger, New York
Marshall, J.: 2005, ‘Corporate Social Responsibility: Hard Choices on Soft Issues’, Financial Executive (July), 44–50
Mathews M. (1990) Codes of Ethics: Organizational Behavior and Misbehavior. In: Frederick W., Preston L. (eds) Business Ethics: Research Issues and Empirical Studies. JAI Press Inc, Greenwich, CT
Mikulincer M., Horesh N. (1999) Adult Attachment Style and the Perception of Others: The Role of Projective Mechanisms. Journal of Personality and Social Psychology 76:1022–1034
Ostas D. (2004) Cooperate, Comply, or Evade? A Corporate Executive’s Social Responsibilities with Regard to Law. American Business Law Journal 41:559–594
Preston L., Post J. (1975) Private Management and Public Policy: The Principle of Public Responsibility. Prentice-Hall, Englewood Cliffs, N.J.
Rechner P., Dalton D. (1991) CEO Duality and Organizational Performance: A Longitudinal Analysis Strategic Management Journal 12:155–160
Ruvolo A. P., Fabin L. A. (1999). Two of a Kind: Perceptions of Own and Partner’s Attachment Characteristics. Personal Relationships 6(1):57–79
Smith E. (1997). Private Selves and Shared Meanings: Or Forgive us for Our Projections as We Forgive Those Who Project into Us. Psychodynamic Counseling 3(2):117–131
Sarbanes P., Oxley M. (2002) Sarbanes-Oxley Act of 2002. U.S.Congress, Washington, D.C.
Staw B.M. (1980) Rationality and Justification in Organizational Life. Research in Organizational Behavior 2:45–80
United States Security and Exchange Commission. 2003, ‘Rulemaking Relating to Corporate Governance’, Release No. 34-48745. Washington, DC
Waddock S. (2005) Hollow Men and Women at the helm... Hollow Accounting Ethics? Issues in Accounting Education 20:145–150
Williams, C.: 1998, ‘Corporate Compliance with the Law in the Era of Efficiency’, N. C. Law Review 76
Author information
Authors and Affiliations
Corresponding author
Additional information
Jacob Rose is Associate Professor at Southern Illinois University Carbondale. His research emphasizes judgment and decision making in accounting and governance contexts.
Rights and permissions
About this article
Cite this article
Rose, J.M. Corporate Directors and Social Responsibility: Ethics versus Shareholder Value. J Bus Ethics 73, 319–331 (2007). https://doi.org/10.1007/s10551-006-9209-z
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s10551-006-9209-z