Insider trading revisited

A recent article in this Journal argued that insider trading is an unethical practice leading to an inefficiently functioning market. The debate on this topic has primarily pitted ethical defenses of prohibition against economic arguments extolling its allowance. In addition to being incomplete, this approach ignores other unwanted economic effects of prohibition itself and unethical implications of its existence. This article shows that Adam Smith's free market concept, when properly interpreted, provides all the incentive structure necessary for an efficient and ethical marketplace even when insider trading is permitted. Deryl W. Martin has presented his research at several regional and national conferences, and has published in the Journal of Economics and Business, the Journal of Strategic and Financial Decisions, The Moneypaper, and several proceedings and newspapers. He is currently Assistant Professor of Finance at Tennessee Technological University in Cookeville, TN.Jeffrey H. Peterson is a doctoral candidate in finance at the University of Alabama. He also has presented his research at several regional and national meetings, and is currently Instructor of Finance at St. Bonaventure University in Olean, NY.     

Consumer ethics: An empirical investigation of factors influencing ethical judgments of the final consumer

Business and marketing ethics have come to the forefront in recent years. While consumers have been surveyed regarding their perceptions of ethical business and marketing practices, research has been minimal with regard to their ethical beliefs and ideologies. This research investigates general attitudes of consumers relative to business, government and people in general, and compares these attitudes to their beliefs concerning various questionable consumer practices. The results show that consumers' ethical beliefs are determined, in part, by who is at fault in the unethical behavior (the seller or the buyer). The results also indicate that those with a more positive attitude toward business are less likely to engage in questionable consumer practices, but one's attitudes toward salespeople, the government and people in general arenot related to the consumer's ethical beliefs.Scott J. Vitell is an Associate Professor and the Michael S. Starnes Professor of Marketing and Business Ethics at the University of Mississippi. His publications have appeared in theJournal of Macromarketing, theJournal of Business Ethics, theJournal of the Academy of Marketing Science, theJournal of Business Research, Research in Marketing and numerous other journals and proceedings.James A. Muncy is Assistant Professor of Marketing at Clemson University. His publications have appeared in theJournal of Marketing, Journal of Business Research, Journal of Current Issues and Research in Advertising, Journal of Marketing Education, andAdvances in Consumer Research. He has also published in the National Proceedings of the American Marketing Association and the American Psychological Association and has published five chapters in books. He is active in the Association for Consumer Research, acting as its Publications Director and Newsletter Coeditor.     

The effect of published reports of unethical conduct on stock prices

This study adds to the empirical evidence supporting a significant connection between ethics and profitability by examining the connection between published reports of unethical behaviour by publicly traded U.S. and multinational firms and the performance of their stock. Using reports of unethical behaviour published in the Wall Street Journal from 1989 to 1993, the analysis shows that the actual stock performance for those companies was lower than the expected market adjusted returns. Unethical conduct by firms which is discovered and publicized does impact on the shareholders by lowering the value of their stock for an appreciable period of time. Whatever their views on whether ethical behaviour is profitable, managers should be able to see a definite connection between unethical behaviour and the worth of their firm's stock. Stockholders, the press and regulators should find this information important in pressing for greater corporate and managerial accountability. Dr. Spuma M. Rao is Associate Professor of Finance, College of Business Administration, University of Southwestern Louisiana. His publications appear in such journals as Global Finance, American Business Review, Financial and Strategic Decision Making, Business and Economic Review, The Appraisal. J. Brooke Hamilton III is Assistant Professor in the Department of Management, University of Southwestern Louisiana. He was head of the Philosophy Department at Tuskegee Institute, spent 14 years in industry and returned to academe after completing his M.B.A. His work appears in the Journal of Business Ethics, Southeastern Journal of Legal Studies in business, and the proceeding of the Southern and Southwestern Marketing Associations.     

Are the elderly really machiavellian? A reinterpretation of an unexpected finding

In an article published recently in theJournal of Business Ethics, Vitellet al. (1991) found that elderly respondents scored surprisingly high on a measure of Machiavellianism. This paper offers an alternative explanation for this unexpected result — it may be an artifact of the survey format employed — and recommends additional research to help clarify the issues raised by Vitell and his colleagues.Peter E. Mudrack is an Assistant Professor in the Department of Management and Organization Sciences at Wayne State University's School of Business Administration. His publications have appeared inHuman Relations, Journal of Business Ethics, andJournal of Organizational Behavior.     

Assessing the application of cognitive moral development theory to business ethics

Cognitive moral development (CMD) theory has been accepted as a construct to help explain business ethics, social responsibility and other organizational phenomena. This article critically assesses CMD as a construct in business ethics by presenting the history and criticisms of CMD. The value of CMD is evaluated and problems with using CMD as one predictor of ethical decisions are addressed. Researchers are made aware of the major criticisms of CMD theory including disguised value judgments, invariance of stages, and gender bias in the initial scale development. Implications for business ethics research are discussed and opportunities for future research delineated.John Fraedrich is an Assistant Professor of Marketing at Southern Illinois University of Carbondale. His areas of interest include ethical decision making and international marketing. He has published inJournal of Macromarketing, Journal of Business Ethics, Journal of Academy of Marketing Science, Journal of Business Research, Journal of Marketing Management, International Journal of Value Based Management, andJournal of International Consumer Marketing. Dr. Fraedrich is co-author of a textbookBusiness Ethics: Ethical Decision Making and Cases, Second Edition.Debbie M. Thorne is an Assistant Professor of Marketing at the University of Tampa. Her areas of interest include business ethics, social network analysis, and cultural issues in organizations. She received a Ph.D. in 1993 and has published in theJournal of Teaching in International Business and numerous conference proceedings.O. C. Ferrell is Interim Dean and Distinguished Professor of Marketing and Business Ethics in the Fogelman College of Business and Economics at Memphis State University. Dr. Ferrell was chairman of the American Marketing Association Ethics Committee that developed the current AMA Code of Ethics. He has published articles on business ethics in theJournal of Marketing, Journal of Marketing Research, Journal of Business Research, Journal of Macromarketing, Human Relations, Journal of Business Ethics, as well as others. He has co-authored ten textbooks includingBusiness Ethics: Ethical Decision Making and Cases, Second Edition, and a tradebook,In Pursuit of Ethics.     

The effect of the recent insider-trading scandal on stock prices of securities firms

This paper addresses the impact of the unethical business conduct of a few individuals that shook the financial market in 1986. Specifically, in the study undertaken for this paper, the wealth status of the shareholders of securities firms was examined in relation to the public disclosure of the insider-trading scandals involving Dennis Levine, Ivan Boesky, and their confederates. It was hypothesized that the expected market-adjusted stock returns for the securities firms would be negative as a result of the scandals. The findings of the study supported the hypothesis. Khalil M. Torabzadeh is Associate Professor of Finance at Radford University in Virginia. He earned his DBA in Finance from Mississippi State University in 1984. He began his teaching career at Appalachian State University, Boone, North Carolina, in 1982, and joined the faculty of Radford University in 1985. He has had articles published in the Journal of Financial Research and the Journal of Applied Business Research. Dan Davidson is Professor of Business Law at Radford University in Virginia. He has five teaching awards, including the Razorback Outstanding Business Faculty Award from the University of Arkansas. He is the author of four textbooks published by PWS Kent Publishing Co., and his articles have been published in the Journal of Business Ethics, the Business Law Review, the Education Forum, and the Journal of Insurance Issues and Practices, among others.Hamid Assar is an Assistant Professor of Finance at Radford University in Virginia. His educational background includes a PhD in Financial Economics (expected in 1989) from Southern Illinois University, an MBA from Central State University in Oklahoma, and a Masters degree in Economics from the University of West Virginia. His research interests are in the areas of mergers and acquisitions, financial markets, and international finance.     

How sales managers control unethical sales force behavior

Researchers have studied marketing ethics from several perspectives. Few studies, however, have analyzed supervisory reactions to unethical behavior by salespeople. The results of this study using a 2 × 3 factorial design showed that the performance level of the salesperson and the consequences of the salesperson's actions influenced some types of discipline used by a sample of 246 sales managers. The findings both support and contradict prior research on how sales managers respond to unethical sales force behavior.James B. DeConinck is an Assistant Professor of Marketing at The University of Dayton. His publications have appeared inThe Journal of Business Research, The Journal of Business Ethics, andThe Journal of Applied Business Research. Prior to being in academics, he held industry positions in transportation and sales.     

Ethical perceptions of organizational politics: A comparative evaluation of American and Hong Kong managers

This paper presents a cross-cultural analysis of ethics with U.S. and Hong Kong Chinese managers as subjects. These managers were given the Strategies of Upward Influence instrument and asked to evaluate the ethics of using various political strategies to attain influence within their organizations. Differences were found between Hong Kong and U.S. managers on a variety of dimensions, indicating important differences between these two groups on their perceptions of ethical behavior. In the paper, we identify potential reasons for the findings, and suggest directions for future work in this area.David A. Ralston is Associate Professor of Management at the University of Connecticut. His management development programs have been presented in both China and Russia. His research interests include cross-cultural managerial issues including work values, influence strategies and stress. Recent research has focused upon Asia and the Pacific-Rim nations. His most recent research has been published in theJournal of Applied Psychology, Journal of International Business Studies, and theAsia-Pacific Journal of Management.Robert Giacalone is currently Associate Professor of Management Systems at the E. Claiborne Robins School of Business, University of Richmond, and is a consultant to both the private and public sectors. He is the author of over 40 management articles and two books, and is the editor of the special issue in theJournal of Business Ethics on behavioral approaches to business ethics. In 1992, he was named editor of the Sage Series in Business Ethics.Robert H. Terpstra is Senior Lecturer of Finance at the Chinese University of Hong Kong. He has consulted for companies in both Hong Kong and China. His current research interests include cross-cultural studies of managerial decision making and risk-taking behavior. His recent work has been published in theJournal of International Business Studies, Asia-Pacific Journal of Management, Pacific-Basic Finance Journal, International Journal of Management and theJournal of Applied Psychology.     

The effectiveness of corporate communicative responses to accusations of unethical behavior

When corporations are accused of unethical behaviour by external actors, executives from those organizations are usually compelled to offer communicative responses to defend their corporate image. To demonstrate the effect that corporate executives' communicative responses have on third parties' perception of corporate image, we present the Corporate Communicative Response Model in this paper. Of the five potential communicative responses contained in this model (no response, denial, excuse, justification, and concession), results from our empirical test demonstrate that a concession is the most effective and robust communicative option.Jeffrey L. Bradford is an Assistant Professor in the Marketing Department at Bowling Green State University. His primary research interests are in the areas of marketing ethics and public policy. His previous research has been published inJournal of Business Ethics, andJournal of Business Strategies.Dennis E. Garrett is an Associate Professor in the Marketing Department at Marquette University. His primary research interests are in the areas of marketing ethics and consumer complaints. His previous research has been published inJournal of Marketing, Journal of Marketing Research, Journal of Business Ethics, Communication Monographs, andBusiness and Society Review. He is also a co-author ofMarketing Theory: Evolution and Evaluation (1988, John Wiley & Sons).     

The relative importance of social responsibility in determining organizational effectiveness: Student responses II

This paper, Study II, is the second in a series of papers investigating the relative importance of social responsibility criteria in determining organizational effectiveness, using student samples. A revised version of the Organizational Effectiveness Menu was used as a questionnaire with a sample of 182 senior undergraduate and the MBA students from three universities. Each respondent was asked to rate the importance of the criteria from a manager's perspective. The results support the earlier findings that students responding as managers rate social responsibility criteria, individually and collectively, among the least important of the potential determinants of organizational effectiveness.Dr. Kenneth L. Kraft is Director of Graduate studies at The University of Tampa. He has published numerous articles on Business Ethics, Organization Design, and Strategic Planning in journals such as theAcademy of Management Review, American Business Review, andJournal of Business Ethics. His current research interest centers on the measurement of moral intensity.Dr. Anusorn Singhapakdi is Assistant of Marketing at Old Dominion University. His research has been primarily in marketing/business ethics. He has published in theJournal of the Academy of Marketing Science, Journal of Business Ethics, Journal of Macromarketing, Journal of Public Policy & Marketing, as well as various other journals and proceedings.     

Ethical beliefs of MIS professionals: The frequency and opportunity for unethical behavior

The frequency and opportunity for unethical behavior by MIS professionals is examined empirically. In addition, the importance of top management's ethical stance, one's sense of social responsibility and the existence of codes of ethics in determining perceptions of the frequency and opportunity for unethical behavior are tested.Results indicate that MIS professionals are perceived as having the opportunity to engage in unethical practices, but that they seldom do so. Additionally, successful MIS professionals are perceived as ethical. Finally, while company codes of ethics were uncommon, top management was seen as supporting high ethical standards. Scott J. Vitell is an Assistant Professor of Marketing at the University of Mississippi. His publications have appeared in the Journal of Macromarketing, the Journal of Business Ethics, Research in Marketing, various national and regional proceedings, and elsewhere. Donald L. Davis is Associate Professor and Director of Management Information Systems Programs in the School of Business at The University of Mississippi. He has published in OMEGA, Journal of Operations Management, Human Systems Management and other journals. His current research interests are in user-system interfaces in DSS, expert systems, and nueral nets.     

Teaching business ethics: Bringing reality to the classroom

This paper presents an alternative method for discussing ethical issues. The method supports the use of the real world situations and emphasizes the interaction of all constituencies. The method incorporates the use of newspaper reports of real-life occurrences. It also stresses the use of local stories when possible.Dietrich L. Schaupp is a Professor of Management at West Virginia University. Dr. Schaupp has previously published in theJournal of Business Ethics. His current research interests focus on quality and ethics.Michael S. Lane is an Associate Professor of Management at West Virginia University. Dr. Lane has previously published in theJournal of Business Ethics. His current research interests focus on business ethics and strategic goals.     

Ethics and accounting doctoral education

This paper expands the literature on accounting ethics education by considering the teaching of ethics in accounting doctoral education. Some of the ethical issues that might be addressed in accounting doctoral education are reviewed. A number of matters relating to teaching ethics to accounting doctoral students are considered. The paper concludes with a summary and some final remarks.Stephen E. Loeb is Professor and Chairman of Accounting and the Ernst & Young Alumni Professor of Auditing, University of Maryland at College Park. He has previously authored or coauthored articles that have been published in theJournal of Business Ethics and currently serves on the editorial board of theJournal of Business Ethics.     

The ethics of going private

In this paper, we analyze some of the ethical dimensions of going private transactions (GPTs), wherein publicly traded firms are taken private. Financial theory suggests that efficiencies may be realized in these transactions such that outside shareholders are made better off. Empirical evidence supports this theory. We therefore argue that GPTs are not inherently exploitive or unethical. The issues of the fiduciary duty of corporate managers to shareholders and their obligations to non-shareholders are also explored. Douglas A. Houston is Associate Professor of Business Economics at the University of Kansas. He has written several articles which have been published in journals such as Cato Journal and Kansas Law Review. John S. Howe is Assistant Professor of Business at the University of Kansas. In 1985 he was awarded Outstanding Educator in the MBA Program. His articles have appeared in Journal of Banking and Finance and Journal of Financial and Quantitative Analysis.     

The internal disclosure policies of private-sector employers: An initial look at their relationship to employee whistleblowing

Whistleblowers have usually been treated as outcasts by private-sector employers. But legal, ethical, and practical considerations increasingly compel companies to encourage employees to disclose suspected illegal and/or unethical activities throughinternal communication channels. Internal disclosure policies/procedures (IDPP's) have been recommended as one way to encourage such communication.This study examined the relationship between IDPP's and employee whistleblowing among private-sector employers. Almost 300 human resources executives provided data concerning their organizations' experiences.Executives in companies with IDPP's reported a significant increase in the number of internal disclosures by employees after implementation. Respondents also reported a significant decrease in the number of external disclosures after implementation of their IDPP. When the level of employee disclosures in companies with IDPP's was compared to those in companies without IDPP's, the overall level of internal disclosures was significantly higher among employers who had the internal policies/procedures. Respondents also reported a marginally significant association between the responsiveness of management to employee-voiced concerns and the level of internal disclosures by employees. Possible interpretations of these results are discussed, and their implications for private-sector employers are addressed.Tim Barnett is an Assistant Professor of Management at Louisiana Tech University. His current research interests include ethical issues in human resources management and ethical decision making. His work has appeared in various journals, including theJournal of Business Research, theJournal of Business Communication, and theJournal of Business Ethics.Dan Cochran is a Professor of Management at Mississippi State University, where he is the Arthur Anderson Business Ethics Coordinator. He has published in numerous national journals and conducts training programs for organizations in managerial skill areas to include ethical decision making. He is past president of the Southern Management Association.G. Stephen Taylor is Associate Professor of Management at Mississippi State University, with emphasis in human resource management. His research and publication interests are in the areas of ethics and HRM, ethical implications of computer applications to business, and compensation management.     

An empirical and ethical analysis of factors motivating managers' merger decisions

This paper examines the role of managerial self-interest in the merger market. It looks at factors influencing managers' merger decisions by analyzing managerial expense preference factors on cross-sectional data employing non-parametric statistical methods. The same factors are examined for acquiring, acquired, and merging firms, and control groups used in each case. The results support the authors' contention that managerial discretion is a significant motivating factor for mergers. The changes in expense preference factors indicate management decisions which provide conditions allowing management to indulge in management preferred expenditures, while reducing risk to their career. The authors then provide a moral/philosophic framework of ethical analysis for examining manager's merger decisions, using teleological and deontological theories. They conclude that merger decisions motivated or influenced by self-interest are unethical and, in the process, provide managers facing a merger decision with a framework for making an ethical decision.Dr. Francis Achampong is a Professor of Business Law and Insurance at Norfolk State University, in Norfolk, Virginia. He is licensed to practice law in New York and Virginia. He has published in journals such as theJournal of Risk and Insurance, theInternational and Comparative Law Quarterly, Dickinson Law Review, and theAkron Law Review.Dr. Wold Zemedkun is an Associate Professor of Finance at Norfolk State University, In Norfolk, Virginia. He has published in journals such as theJournal of Business Strategies, theAkron Business and Economic Review,, theJournal of Financial Education, and theAtlantic Economic Journal.     

American political values and agency theory: A perspective

This paper explores the historical American political values which have shaped modern financial theory and agency theory. Financial agency theory's intellectual roots are shown to be located in the liberal tradition which espouses the instrumental nature of property and property rights. The paper also argues that financial theorists should recognize that, historically, economic efficiency was not a value or end in itself but merely a means by which more fundamental social goals might be achieved. Fred R. Kaen is a Professor of Finance at the University of New Hampshire. He has written many articles about financial markets and international financial management. His work has appeared in The American Economic Review, The Journal of Finance and The Journal of Money Credit and Banking. He will be spending next year at the Norwegian School of Economics and Business as a Visiting Professor of Finance. Allen Kaufman is an Assistant Professor of Business Administration at the University of New Hampshire. He has written a number of books including Capitalism, Slavery and Republican Values and his work has been published in the California Management Review, the Journal of Political and Military Sociology, and Business Horizons.Larry Zacharias is an Associate Professor of Management at the University of Massachusetts. He holds a law degree and has written many articles about corporate law and anti trust.     

Ethical ideology and ethical judgment regarding ethical issues in business

Differences in ethical ideology are thought to influence individuals' reasoning about moral issues (Forsyth and Nye, 1990; Forsyth, 1992). To date, relatively little research has addressed this proposition in terms of business-related ethical issues. In the present study, four groups, representing four distinct ethical ideologies, were created based on the two dimensions of the Ethical Position Questionnaire (idealism and relativism), as posited by Forsyth (1980). The ethical judgments of individuals regarding several business-related issues varied, depending upon their ethical ideology.Tim Barnett is Assistant Professor of Management at Louisiana Tech University. He has published in such journals asPersonnel Psychology, theJournal of Business Research, andHuman Relations. His research interests include ethical decision making and ethical issues in HRM.Ken Bass is Assistant Professor of Management at East Carolina State University. He has articles published in several journals, including theJournal of Personal Selling and Sales Management. His research interests include ethical decision making, ethical strategy, and methodology.Gene Brown is Associate Professor Marketing at Louisiana Tech University. He is published in such journals as theJournal of Retailing, the Journal of the Academy of Marketing Science, theJournal of Business Research, Psychology and Marketing, and Industrial Marketing Management. His main interests include personal selling, retailing, ethics, and methodology.     

Exploring the structure of ethical attributions as a component of the consumer decision model: The vicarious versus personal perspective

The managerial ethics literature is used as a base for the inclusion of Ethical Attribution, as an element in the consumer's decision process. A situational model of ethical consideration in consumer behavior is proposed and examined for Personal vs. Vicarious effects. Using a path analytic approach, unique structures are reported for Personal and Vicarious situations in the evaluation of a seller's unethical behavior. An attributional paradigm is suggested to explain the results. Joel Whalen is an Assistant Professor of Marketing at DePaul University, Chicago. He has published articles in Psychology & Marketing, Journal of Business Research, and Journal of Business Ethics. His research has been published in the proceedings of the American Marketing Association's Micro-Computers in Marketing Conference; Atlantic Marketing Association; the American Marketing Association Conference on Culture and Sub-Cultural Influences; Northeast Decision Science Institute, Southern Marketing Association, and Decision Sciences Institute. Robert E. Pitts, is Professor and Chair of the Department of Marketing and the Director of the Kellstadt Center for Marketing Analysis and Planning at DePaul University. He served as a member of the faculty of Jacksonville State University, the University of Notre Dame and the University of Mississippi. Dr. Pitts' research has appeared in numerous publications including the Journal of Marketing, Journal of Bank Research, Journal of Advertising, Journal of Consumer Research, Journal of Marketing Education, Journal of Business Research, Journal of Social Psychology, Southern Economic Review, Journal of Travel Research, Journal of Behavioral Economics, The Mid-South Journal of Economics, Psychology and Marketing, Marketing and Media Decisions and Journal of Insurance Issues and Practices. Dr. Pitts is the editor of Personal Values and Consumer Psychology (Lexington Publishers, and co-author of Bank Marketing, A Guide to Strategic Planning, and Effective Bank Marketing Issues, Techniques and Application. Over the past decade, Dr. Pitts has served as a consultant to such firms as General Motors Corporation, Congolium Corp-Kinder Division, National Standard Steel Corp, WalMart Corp Training Programs, Illinois State Chamber of Commerce and Council of State Chambers of Commerce. John K. Wong teaches International Marketing Management and Consumer Behavior at DePaul University. He served as a member of the faculty of the University of Missouri at Columbia and Washington State University. Dr. Wong's research has appeared in numerous publications including the International Marketing Review, Journal of Business Research, Journal of Ambulatory Care Management, International Journal of Bank Marketing and the proceedings of the American Marketing Association, Association for Consumer Research, Academy of Marketing Science, Academy of International Business and Pan-Pacific Business Association.     

Legislated Ethics or Ethics Education?: Faculty Views in the Post-Enron Era

The tension between external forces for better ethics in organizations, represented by legislation such as the Sarbanes–Oxley Act (SOX), and the call for internal forces represented by increased educational coverage, has never been as apparent. This study examines business school faculty attitudes about recent corporate ethics lapses, including opinions about root causes, potential solutions, and ethics coverage in their courses. In assessing root causes, faculty point to a failure of systems such as legal/professional and management (external) and declining personal values (internal). We also found that faculty recommend external forces as a remedy more often than increased ethics educational coverage; we contextualize this finding with recent ethics education literature. We conclude by proposing that neither legislation nor ethics education alone are complete when addressing widespread unethical corporate acts and offer a multi-faceted approach to ethics educational opportunities. Jeri Mullins Beggs is an Assistant Professor of Marketing at Illinois State University. She earned her Ph.D. in marketing at Saint Louis University. Her current research interests are ethics education, health care marketing, and social marketing. Her work has been presented and published at various conferences and journals including most recently the Journal of Management Education, Marketing and Public Policy conference and the Consumer Satisfaction, Dissatisfaction, and Complaining Behavior conference. She also recently served as co-editor of a special issue of Journal of Management Education on Teaching Business ethics. Kathy Lund Dean is a member of the management department at Idaho State University. She earned her Ph.D. in organizational behavior and philosophy from Saint Louis University. Her current research interests lie in operationalizing non-traditional research methodologies, immersion pedagogies such as service-learning, and spiritual wholeness and authenticity in work place. Her research has appeared in multiple journals including Journal of Management Education, Journal of Management, Spirituality, and Religion, Journal of Organizational Change Management, International Journal of Public Administration, and Academy of Management Executive. She serves as the Associate Editor for the Journal of Management Education.