Publication

Why Financial Executives Do Bad Things: The Effects of the Slippery Slope and Tone at the Top on Misreporting Behavior

Rose, A. M., Rose, J. M., Suh, I., Thibodeau, J., Linke, K. & Norman, C. S., 31-Aug-2020, In : Journal of Business Ethics. 19 p.

Research output: Contribution to journalArticleAcademicpeer-review

APA

Rose, A. M., Rose, J. M., Suh, I., Thibodeau, J., Linke, K., & Norman, C. S. (2020). Why Financial Executives Do Bad Things: The Effects of the Slippery Slope and Tone at the Top on Misreporting Behavior. Journal of Business Ethics. https://doi.org/10.1007/s10551-020-04609-y

Author

Rose, Anna M. ; Rose, Jacob M. ; Suh, Ikseon ; Thibodeau, Jay ; Linke, Kristina ; Norman, Carolyn Strand. / Why Financial Executives Do Bad Things : The Effects of the Slippery Slope and Tone at the Top on Misreporting Behavior. In: Journal of Business Ethics. 2020.

Harvard

Rose, AM, Rose, JM, Suh, I, Thibodeau, J, Linke, K & Norman, CS 2020, 'Why Financial Executives Do Bad Things: The Effects of the Slippery Slope and Tone at the Top on Misreporting Behavior', Journal of Business Ethics. https://doi.org/10.1007/s10551-020-04609-y

Standard

Why Financial Executives Do Bad Things : The Effects of the Slippery Slope and Tone at the Top on Misreporting Behavior. / Rose, Anna M.; Rose, Jacob M.; Suh, Ikseon; Thibodeau, Jay; Linke, Kristina; Norman, Carolyn Strand.

In: Journal of Business Ethics, 31.08.2020.

Research output: Contribution to journalArticleAcademicpeer-review

Vancouver

Rose AM, Rose JM, Suh I, Thibodeau J, Linke K, Norman CS. Why Financial Executives Do Bad Things: The Effects of the Slippery Slope and Tone at the Top on Misreporting Behavior. Journal of Business Ethics. 2020 Aug 31. https://doi.org/10.1007/s10551-020-04609-y


BibTeX

@article{65d69fe0ccf84e8a8e146252dd450101,
title = "Why Financial Executives Do Bad Things: The Effects of the Slippery Slope and Tone at the Top on Misreporting Behavior",
abstract = "This paper employs theory of normal organizational wrongdoing and investigates the joint effects of management tone and the slippery slope on financial reporting misbehavior. In Study 1, we investigate assumptions about the effects of sliding down the slippery slope and tone at the top on financial executives' decisions to misreport earnings. Results of Study 1 indicate that executives are willing to engage in misreporting behavior when there is a positive tone set by the Chief Financial Officer (CFO) (kind attitude toward employees and non-aggressive attitude about earnings), regardless of the presence or absence of a slippery slope. A negative tone set by the CFO does not facilitate the transition from minor indiscretions to financial misreporting. In Study 2, we find that auditors evaluating executives' decisions under the same conditions as those in Study 1 do not react to the slippery slope condition, but auditors assess higher risks of fraud when the CFO sets a negative tone. Overall, our results indicate that many assumptions about the slippery slope and tone at the top should be questioned. We provide evidence that pro-organizational behaviors and incrementalism yield new insights into the causes of ethical failures, financial misreporting behavior, and failures of corporate governance mechanisms.",
keywords = "Fraud, Misreporting, Slippery slope, Tone at the top, STYLE, MANAGERS, EARNINGS, ETHICS, PERCEPTIONS, STRATEGY, OTHERS, CHIEF, CFOS",
author = "Rose, {Anna M.} and Rose, {Jacob M.} and Ikseon Suh and Jay Thibodeau and Kristina Linke and Norman, {Carolyn Strand}",
year = "2020",
month = aug,
day = "31",
doi = "10.1007/s10551-020-04609-y",
language = "English",
journal = "Journal of Business Ethics",
issn = "0167-4544",
publisher = "SPRINGER",

}

RIS

TY - JOUR

T1 - Why Financial Executives Do Bad Things

T2 - The Effects of the Slippery Slope and Tone at the Top on Misreporting Behavior

AU - Rose, Anna M.

AU - Rose, Jacob M.

AU - Suh, Ikseon

AU - Thibodeau, Jay

AU - Linke, Kristina

AU - Norman, Carolyn Strand

PY - 2020/8/31

Y1 - 2020/8/31

N2 - This paper employs theory of normal organizational wrongdoing and investigates the joint effects of management tone and the slippery slope on financial reporting misbehavior. In Study 1, we investigate assumptions about the effects of sliding down the slippery slope and tone at the top on financial executives' decisions to misreport earnings. Results of Study 1 indicate that executives are willing to engage in misreporting behavior when there is a positive tone set by the Chief Financial Officer (CFO) (kind attitude toward employees and non-aggressive attitude about earnings), regardless of the presence or absence of a slippery slope. A negative tone set by the CFO does not facilitate the transition from minor indiscretions to financial misreporting. In Study 2, we find that auditors evaluating executives' decisions under the same conditions as those in Study 1 do not react to the slippery slope condition, but auditors assess higher risks of fraud when the CFO sets a negative tone. Overall, our results indicate that many assumptions about the slippery slope and tone at the top should be questioned. We provide evidence that pro-organizational behaviors and incrementalism yield new insights into the causes of ethical failures, financial misreporting behavior, and failures of corporate governance mechanisms.

AB - This paper employs theory of normal organizational wrongdoing and investigates the joint effects of management tone and the slippery slope on financial reporting misbehavior. In Study 1, we investigate assumptions about the effects of sliding down the slippery slope and tone at the top on financial executives' decisions to misreport earnings. Results of Study 1 indicate that executives are willing to engage in misreporting behavior when there is a positive tone set by the Chief Financial Officer (CFO) (kind attitude toward employees and non-aggressive attitude about earnings), regardless of the presence or absence of a slippery slope. A negative tone set by the CFO does not facilitate the transition from minor indiscretions to financial misreporting. In Study 2, we find that auditors evaluating executives' decisions under the same conditions as those in Study 1 do not react to the slippery slope condition, but auditors assess higher risks of fraud when the CFO sets a negative tone. Overall, our results indicate that many assumptions about the slippery slope and tone at the top should be questioned. We provide evidence that pro-organizational behaviors and incrementalism yield new insights into the causes of ethical failures, financial misreporting behavior, and failures of corporate governance mechanisms.

KW - Fraud

KW - Misreporting

KW - Slippery slope

KW - Tone at the top

KW - STYLE

KW - MANAGERS

KW - EARNINGS

KW - ETHICS

KW - PERCEPTIONS

KW - STRATEGY

KW - OTHERS

KW - CHIEF

KW - CFOS

U2 - 10.1007/s10551-020-04609-y

DO - 10.1007/s10551-020-04609-y

M3 - Article

JO - Journal of Business Ethics

JF - Journal of Business Ethics

SN - 0167-4544

ER -

ID: 133820257