BUSINESS RESEARCH

(Re)building Corporate Trust

Corporate scandals and misdemeanours typically have devastating effects on corporate trust: think the LIBOR rigging scandal, the Deepwater Horizon oil spill, and News Corporation’s phone-hacking scandal.

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October 2013

In recent years, governments around the world have been pressed to implement reforms to restore confidence. For example, in the US the Sarbanes-Oxley Act of 2002 holds CEOs and CFOs personally responsible for financial statements, and enforces tougher sentencing rules for wrongdoers. Leading business schools have established ethics research centres and made ethics training a core requirement.

Despite such reforms, governments and industry groups have so far failed to significantly reduce instances of wrongdoing in corporate life. In the US, researchers have reviewed several decades of research to identify 6 signals that people consider when judging whether an organisation, group or person is trustworthy:

1. Common values: Does the trustee share our values and beliefs?
2. Aligned interests: Do the trustee’s interests coincide rather than conflict with ours?
3. Benevolence: Does the trustee care about our welfare?
4. Competence: Is the trustee capable of delivering on commitments?
5. Predictability and integrity: Does the trustee abide by commonly accepted ethical standards (such as honesty and fairness), and is the trustee predictable?
6. Communication: Does the trustee listen and engage in open and mutual dialogue?

Referenced techniques

Technique

Sarbanes-Oxley Act 2002

This concept explains The Sarbanes Oxley Act by providing its description and examples of how it is applied.

Technique

Bribery Act 2010

The concept reviews the Act and suggests procedures which relevant commercial organisations can put into place to prevent instances of bribery.

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