A Business Ethics Perspective on Sarbanes Oxley and the Organizational Sentencing Guidelines

Michigan Law Review, Vol. 105, No. 8

Ross School of Business Paper No. 1053

47 Pages Posted: 13 Oct 2006

See all articles by David Hess

David Hess

The Stephen M. Ross School of Business at the University of Michigan

Abstract

This paper assesses the ability of the Sarbanes-Oxley Act, the revised Organizational Sentencing Guidelines, and other changes affecting the governance of corporations, to reduce the incidence of fraud and to increase the reporting of financial misconduct. In Part I, I look specifically at the individual decision-makers within the organization and the ethical problems they face. To understand the individual's decision, I use of the Theory of Planned Behavior (TPB). The TPB is a widely tested theory from the field of social-psychology. It is a parsimonious model but has significant power in explaining variations in intentions. The simplicity of the model also makes it useful for understanding and explaining the various studies that have been conducted on ethical behavior in organizations. In Part II, I move upward to the level of the organization and examine its influence on the employee's intentions and behaviors. Part II.A reviews the research on managing ethics and compliance programs, while Part II.B analyzes compliance programs through the TPB. With that understanding, Part III takes another step back to consider how legislation such as Sarbanes Oxley, or the Organizational Sentencing Guidelines, does and can influence corporations to take actions that will improve the ethical behavior of their employees.

Keywords: Ethics, Compliance, Corporate Culture, Sarbanes-Oxley

JEL Classification: G30, G38, K20, K22, M14

Suggested Citation

Hess, David, A Business Ethics Perspective on Sarbanes Oxley and the Organizational Sentencing Guidelines. Michigan Law Review, Vol. 105, No. 8; Ross School of Business Paper No. 1053. Available at SSRN: https://ssrn.com/abstract=936978

David Hess (Contact Author)

The Stephen M. Ross School of Business at the University of Michigan ( email )

701 Tappan Street
Ann Arbor, MI MI 48109
United States
734-763-9779 (Phone)

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