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. (shrink)

This Handbook presents what world and regional religions teach about economic morality. It also compares the major religions, especially the Abrahamic faiths, in their positions on various social, business, and policy themes, such as feminism, competition, and the ecology, among others. The concluding chapter is an analytical synthesis that presents and explains the patterns that emerge from the various religions in this Handbook. Readers will find a remarkable convergence in religions’ teachings on economic morality, despite their wide differences in dogma, (...) ecclesial structures, and social practices. This confluence can be traced to similarities in the underlying anthropologies and cosmologies of these faiths. Readers will also discover that these religions’ economic teachings are the antithesis of contemporary market ethos, policy, and praxis. This Handbook underscores a symbiosis between religion and economic life as they mutually enrich each other. On the one hand, religion improves the efficiency and efficacy of economic life by lowering the frictional and monitoring costs of market operations. Virtuous market participants internalize norms of good economic conduct and behave accordingly. On the other hand, socio-economic life offers manifold enticements, comforts, and overindulgences that paradoxically push devout adherents to invest themselves even further in their beliefs. Socio-economic life provides an opportunity for religions to build strong faith communities and for believers to reify their religion in their economic conduct. This Handbook presents the richness, nuances, and rationale of religions and their economic ethics based on their vision of a natural and divine order. It shows that they share far more in common than whatever divides them, at least when it comes to economic morality. (shrink)