The Psychology of Corporate Dishonesty
19 Pages Posted: 23 Nov 2006
Despite the large amount of literature that has been written over the last 30 years on the regulation of corporate misconduct, relatively little attention has been addressed to developing a detailed understanding of the human element of corporate dishonesty. Corporations are not by themselves dishonest. Their dishonesty comes from the decisions and actions of individuals within the organization. Yet, important questions on what affects individuals in their decision-making on dishonesty have received limited scholarly attention. This article assists in addressing this gap by developing a psychologically informed perspective on the problem of corporate dishonesty. Drawing on a range of literature from cognitive and organizational psychology, it argues that we need to understand well behaviors that we seek to regulate well. All regulation rests on assumptions and predictions about human behavior. If we do not accurately recognize the factors that affect decision-making on corporate dishonesty, we are poorly equipped to design regulation that influences this behavior.
Keywords: corporate governance, cognitive psychology, dishonesty, corporate misconduct
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