ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

Business Ethics and Damaged Trust

Updated on August 7, 2019
lani81 profile image

MBA graduate Lani has spent the past 10 years researching, discussing, and writing about major concepts related to business and leadership.

When It All Goes Wrong

Enron, Worldcom, Tyco, Freddie Mac, Bernie Madoff, I could absolutely go on…..and on…..and on. If you do not recognize a single name listed, you certainly have no idea what these organizations have in common. I will tell you. Each entry on the list above is the name of a major organization brought down by massive financial scandals ranging from $150 million to $75 billion dollars, ravaging investment funds, retirement savings, and the personal wealth of anyone caught in the wake of the unethical managerial accounting and lack of oversight plaguing these organizations. Managerial accounting, when used correctly, is designed to depict a financial snapshot, providing invaluable information to decision makers, controlling spending, influencing strategy, and anchoring the organization in monetary rationality and reality. The numbers corporate leadership receives through managerial accounting are meaningless unless they have been competently, objectively, and honestly gathered, analyzed, and reported (Brewer & Garrison, 2016). So what happens when it all goes wrong? What has to happen for it all to go wrong? The answer to that is ethics. Failed ethics leads to failed managerial behavior and damaged trust between corporate America and its loyal and disillusioned public.

Damaged Trust

Recurring unethical financial accounting sagas draw the public’s attention towards the realization of how much power and trust lies in the hands of managers and corporate accountants. Huge financial debacles, results of unethical accounting, continue to ruin the lives of millions of people and diminishes trust between financial institutions and the general population. Therefore, ethics are a prominent, and valid, topic of discussion when it comes to corporate finance and accounting. Currently there are roughly 8 concepts that fall under the umbrella of business ethics; personal responsibility, representative or official responsibility, personal loyalties, corporate responsibilities, organizational loyalties, economic responsibilities, technical morality and legal responsibility. This article will focus on personal and corporate social responsibility as those two contribute directly to the large scale rise and fall of unethical behavior and practices.

Personal Responsibility

Leaders have a personal responsibility in taking appropriate care in their task, duties and decisions made as they affect the lives of those who follow. Far too many leaders employed by Enron, WorldCom, Tyco, etc. lost sight of their personal responsibility in pursuit of luxury and greed. Decision makers must remain accountable for planning, strategy and financial integrity on all accounts. Leaders and followers have an ethical responsibility to represent the truth, however this becomes exceptionally difficult when those at the top are not good examples for descending ranks. Admit to and own mistakes, clear a path for a solution, and increase trust in the leader and the position. Finally, a good leader is ethically responsible for their own aptitude and capacity to perform expected functions, committing to remaining relevant and up-to-date with the technologies and strategies prominent in the field at the time.

Corporate Social Responsibility

The idea of corporate responsibility must be prefaced with the idea of a corporation as an autonomous entity….basically a person. As anachronistic as this may be, it is an American reality. Corporations are seen as people in many aspects of federal law……sooooo… we are here. Corporations are expected to be model citizens and extend practices beyond the criteria of written law and do everything possible to protect fellow citizens and the environment. Contribute to social welfare, philanthropy and support the interests of stakeholders, customers, suppliers and the communities surrounding the organization. Economist Milton Friedman once wrote “There is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits so long as it…engages in open and free competition, without deception or fraud (Brewer & Garrison).” Many would argue a corporation is responsible for more than profits and need to be in pursuit of more substantial purposes. I’m not going to offer my opinion on the subject here, but feel free to leave a comment and perhaps we can discuss corporate social responsibility in a forum or blog.

What It All Boils Down To

When business men and women engage in unethical behavior, trust between corporate America and the public is damaged, creates tangible tension, leaves deep scars, and invokes visceral emotional reactions when media reports begin to sound like much of the same. Financial competition and social acceptance are added obstacles to ethical behavior and have a tendency to back individuals into an emotional corner that is stressful and difficult to overcome. Remaining diligent in ethics may be difficult but is absolutely necessary to maintain a fluid and trustworthy free market society.

For a more indepth look into the role of trust in business relationships, visit my article "Trust and Leadership."


Noreen, E., Brewer, P., & Garrison, R. (2016). Managerial accounting for managers. (4th ed.). McGraw-Hill/Irwin. ISBN: 9781308886718


This website uses cookies

As a user in the EEA, your approval is needed on a few things. To provide a better website experience, uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at:

Show Details
HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
LoginThis is necessary to sign in to the HubPages Service.
Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
AkismetThis is used to detect comment spam. (Privacy Policy)
HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the or domains, for performance and efficiency reasons. (Privacy Policy)
Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
MavenThis supports the Maven widget and search functionality. (Privacy Policy)
Google AdSenseThis is an ad network. (Privacy Policy)
Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
Index ExchangeThis is an ad network. (Privacy Policy)
SovrnThis is an ad network. (Privacy Policy)
Facebook AdsThis is an ad network. (Privacy Policy)
Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
AppNexusThis is an ad network. (Privacy Policy)
OpenxThis is an ad network. (Privacy Policy)
Rubicon ProjectThis is an ad network. (Privacy Policy)
TripleLiftThis is an ad network. (Privacy Policy)
Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)
ClickscoThis is a data management platform studying reader behavior (Privacy Policy)