The dynamics of business ethics and economic activity

Noe, Thomas (1993) The dynamics of business ethics and economic activity. In: Winter Meeting of the Econometric Society, 7 January, 1993, Anaheim, California, USA.

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The authors model the agency relationship between managers and investors. Through socialization, ethical managers develop internalized norms that prevent them from acting opportunistically. Unethical managers lack these norms. Higher ethical standards on the part of managers increase economic activity in the short run. However, increased economic activity increases opportunities to profit from unethical behavior, eroding ethical standards over the long run. When this rate of erosion is high, cycling of ethics and economic activity emerges. Otherwise, ethics and economic activity converge to a stable long-run limiting value.

Item Type: Conference or Workshop Item (Paper)
Keywords: Business ethics; Economic activity; Executives; Capitalists & financiers; Business enterprises; Profit; finance
Subject(s): Finance
Date Deposited: 07 Jun 2012 08:34
Last Modified: 02 Mar 2017 10:38
Funders: N/A

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