Public relations and corporate communications experts are urging corporations to more strongly embrace strict ethical standards.
Ethical mishaps can cause corporations to lose customers, business partners, income and stock value, according to the Consequences of Managerial Indiscretions: Sex, Lies, and Firm Value, a study published in the Journal of Financial Economics. Ethical indiscretions are also associated with an increased probability of shareholder-initiated lawsuits, high employee turnover and government investigations.
Organizations can avoid such problems only by adhering to high ethical standards. How the organization and its leading executives respond to ethical stumbles says much about the role that PR and ethics play in decision-making.