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Putting integrity Into Finance: A Purely Positive Approach

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  • Werner Erhard
  • Michael C. Jensen

Abstract

The seemingly never ending scandals in the world of finance with their damaging effects on value and human welfare (that continue unabated in spite of all the various efforts to curtail the behavior that results in those scandals) argues strongly for an addition to the current paradigm of financial economics. We summarize here our new theory of integrity that reveals integrity as a purely positive phenomenon with no normative aspects whatsoever. Adding integrity as a positive phenomenon to the paradigm of financial economics provides actionable access (rather than mere explanation with no access) to the source of the behavior that has resulted in those damaging effects on value and human welfare, thereby significantly reducing that behavior. More generally we argue that this addition to the paradigm of financial economics can create significant increases in economic efficiency and productivity.

Suggested Citation

  • Werner Erhard & Michael C. Jensen, 2014. "Putting integrity Into Finance: A Purely Positive Approach," NBER Working Papers 19986, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:19986
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    Cited by:

    1. Servaes, Henri & Tamayo, Ane, 2015. "Social Capital, Trust, and Firm Performance during the Financial Crisis," CEPR Discussion Papers 10399, C.E.P.R. Discussion Papers.
    2. Jongmoo Jay Choi & Jimi Kim & Oded Shenkar, 2023. "Temporal Orientation and Corporate Social Responsibility: Global Evidence," Journal of Management Studies, Wiley Blackwell, vol. 60(1), pages 82-119, January.
    3. Cline, Brandon N. & Walkling, Ralph A. & Yore, Adam S., 2018. "The consequences of managerial indiscretions: Sex, lies, and firm value," Journal of Financial Economics, Elsevier, vol. 127(2), pages 389-415.
    4. Roberto Tamborini, 2016. "The ''obscure puzzle'' of management control. Any remedy?," DEM Working Papers 2016/02, Department of Economics and Management.
    5. Carol L. Cain & Gary M. Fleischman & Antonio J. Macias & Juan Manuel Sanchez, 2021. "Ethics, Adverse Selection, Target Method of Sale Strategies, and Akerlof’s “Lemons†Problem," Accounting and Finance Research, Sciedu Press, vol. 10(3), pages 1-1, August.
    6. Alvaro Turriago-Hoyos & Ulf Thoene & Surendra Arjoon, 2016. "Knowledge Workers and Virtues in Peter Drucker’s Management Theory," SAGE Open, , vol. 6(1), pages 21582440166, March.
    7. Zamagni, Stefano, 2021. "The quest for an axiological reorientation of economic science," Structural Change and Economic Dynamics, Elsevier, vol. 58(C), pages 391-401.

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    • G02 - Financial Economics - - General - - - Behavioral Finance: Underlying Principles

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