Effective Strategies for Deterring Unethical Behavior in U.S. Fin

Section 1: Foundation of the Project

Unethical business practices within the U.S. financial industry have become a

growing concern. Recent high-profile scandals, such as the Wells Fargo fake accounts

scandal, highlighted the vulnerability of financial organizations to ethical breaches (Cull

et al., 2020). Such misconduct undermines the integrity of financial institutions, leading

to a loss of shareholder trust and a tarnished organizational reputation (Naumovska &

Lavie, 2021). The ability of leaders to effectively deter unethical behavior is paramount

in safeguarding the financial stability and moral credibility of financial institutions

(Roszkowska & Melé, 2021). Despite regulatory frameworks and compliance measures,

some financial leaders struggle to implement strategies that successfully curb employees’

unethical actions (Benlahcene et al., 2022). This study addressed the identified problem

by exploring the strategies some U.S. financial industry leaders use to deter unethical

employee behavior.

Background of the Problem

The financial industry plays a crucial role in global economies, where ethical

standards are vital for maintaining trust between organizations, shareholders, and the

public. Unethical behavior remains an entrenched and pervasive issue within U.S.

financial institutions, highlighting significant gaps in enforcement, oversight, and

organizational culture (Teichmann & Wittmann, 2024). Some examples of financial fraud

in the United States include insider trading, account fraud, and market manipulation

(Ünvan, 2020). One prominent example is the Wells Fargo scandal, where employees

opened millions of unauthorized accounts without customer consent, leading to a $3

billion settlement and significant reputational damage (Hurley & Hurley, 2020). Another

example is the Bernie Madoff Ponzi scheme, which defrauded investors of approximately

$65 billion, collapsing many investors’ financial portfolios (Hardy & Bell, 2020). The

consequences of unethical behavior in financial corporations can be severe, including

significant financial penalties, legal repercussions, damaged reputations, loss of

shareholder trust, and reduced employee morale (Mishra et al., 2021). Leadership plays a

pivotal role in shaping ethical behavior within financial organizations.

Effective leadership can mitigate unethical behavior in financial institutions by

fostering a culture of accountability, transparency, and integrity. Leaders have a large

influence on organizational culture, which can either promote ethical behavior or

contribute to ethical lapses (Kaptein, 2019). Leaders who model ethical behavior and

implement clear codes of conduct create an environment where employees feel

responsible for their ethical actions (Al Halbusi et al., 2021). Conversely, leaders

prioritizing short-term profits over ethical considerations or failing to enforce ethical

standards can indirectly encourage employee misconduct (Kaptein, 2023). Leadership

failures in promoting ethical behavior can also result in organizational cultures where

unethical practices become normalized (Mishra et al., 2021). Therefore, identifying and

exploring effective strategies leaders in the U.S. financial industry use for deterring

unethical employee behavior warrants further research.

Business Problem Focus and Project Purpose

The specific business problem was that some leaders in the U.S. financial industry

lack effective strategies for deterring unethical employee behavior. Therefore, the

purpose of this qualitative pragmatic inquiry study was to identify and explore the

effective strategies that some leaders in the U.S. financial industry use to deter unethical

employee behavior. The target population for the study consisted of enterprise leaders in

the U.S. financial industry in New York. The sample included at least six leaders,

purposively selected from the targeted population who met pre-defined inclusion criteria.

The participants must: (a) have held a leadership position in a financial corporation, (b)

have had at least 5 years of experience managing teams in the industry, and (c) be

directly involved in designing or implementing effective strategies for deterring unethical

employee behavior.

I collected data in the study using semistructured interviews and publicly

available documents. I used semistructured interviews to gather in-depth insights from

the participants on effective strategies for deterring unethical employee behavior. I

triangulated the findings from semistructured interviews by analyzing publicly available

company documents for evidence of ethical culture. The theoretical framework that

guided the study is Kaptein’s (2008) corporate ethics virtue (CEV) model, which is based

on the idea that an organization's ethical culture significantly influences employees'

ethical or unethical behavior.

Research Question

What effective strategies do leaders in U.S. financial institutions use to deter

unethical employee behavior?

Assumptions and Limitations

Acknowledging a study’s assumptions and limitations enhances the credibility of

the findings by providing transparency about potential biases, clarifying the scope of the

research, and allowing readers to critically assess the validity and transferability of the

results. Here, I discuss the study’s assumptions and limitations, first considering

axiological, ontological, epistemological, and methodological assumptions underlying the

research. In the limitations section, I describe limitations associated with my choices

related to study design and methodology.

Assumptions

Researchers promote rigor by stating assumptions underlying the research

approach. Assumptions are beliefs that a researcher holds as truth without verification

(Huttunen & Kakkori, 2020). The study has underlying axiological, ontological,

epistemological, and methodological assumptions. Axiological assumptions in research

refer to the beliefs and values that influence the researcher’s perspective on what is

important to study (Coates, 2021). The axiological assumptions underlying my study

revolved around the importance of ethical leadership for promoting integrity within

financial institutions. I recognized that my values, particularly the belief that ethical

behavior is fundamental to organizational success, shaped the research question, the

study’s design, and the interpretation of findings. My assumptions reflected my

commitment to improving ethical standards and protecting stakeholders’ interests,

including employees, shareholders, and the broader public. Axiologically, my study

assumed that ethical leadership is not only desirable but essential for addressing the

pervasive issue of unethical behavior in the U.S. financial industry. Therefore, the

research was driven by a value-laden perspective that aims to foster positive ethical

change within the industry.

Ontology refers to the assumptions researchers make about the nature of reality.

Ontological assumptions involve whether a researcher considers a phenomenon

objectively real and independent of human thought or socially constructed, existing

through human interpretation (Otoo, 2020). I have an objective ontological perspective

that unethical behavior in the financial industry is a real, observable phenomenon that

exists independently of individual perceptions. Therefore, I assumed that unethical

behavior can be consistently identified across different organizations and that leadership

strategies to deter unethical behavior can be objectively studied and understood. I aimed

to identify and explore the strategies leaders use to prevent unethical actions, treating

unethical behaviors and their solutions as real and measurable phenomena, not pure

subjective interpretations. Therefore, my ontological stance involved seeking concrete,

actionable strategies potentially applicable to other settings in the financial industry.

My study’s epistemological assumptions concern the nature of knowledge and

how knowledge can be understood about the relationship between leadership strategies

and unethical behavior in financial institutions. I approached the study from a pragmatic

epistemological perspective; my stance involved the assumption that knowledge is

generated through practical investigation and application (Powell, 2020). Therefore, my

epistemological stance emphasized that knowledge is both theoretical and practical,

gained through the application of leadership strategies in real-world settings. Therefore, I

assumed that understanding how to effectively deter unethical behavior comes from

engaging with leaders’ experiences, collecting their insights through interviews, and

identifying patterns of what works in practice.

The methodological assumptions that guided the study are grounded in the belief

that qualitative methods are essential for exploring the complex, context-dependent

nature of leadership strategies aimed at deterring unethical behavior. I assumed that the

intricacies of leadership approaches, ethical decision-making, and organizational culture

cannot be fully understood or captured through quantitative means, such as surveys or

statistical models. While these methods are valuable for measuring broad trends,

quantitative instruments often fail to provide in-depth insights, which are required to

understand what specific strategies leaders use to deter unethical behavior (Fischer et al.,

2023). My assumptions about the nature of ethical leadership led to my choice to use

semistructured interviews to facilitate a rich exploration of leaders’ insights that the

unique dynamics of each organization may shape.

The pragmatic inquiry design has underlying methodological assumptions. An

assumption of pragmatic inquiry is that the research question is rooted in real-world

problems that require solutions (Kelly & Cordeiro, 2020). The methodology is not tied to

a specific philosophical stance, including being focused on solving a practical issue. The

assumptions underlying pragmatic inquiry are consistent with my research question of

identifying and exploring specific strategies to address a real-world problem. Pragmatic

inquiry has an assumption that knowledge generated through the research must be

applicable and actionable in specific contexts (Morgan, 2014). In my study, I assumed

that the interviews with financial industry leaders will yield practical strategies that can

be implemented in similar settings.

Purposive sampling through social media also has associated assumptions. One

such assumption was that social media platforms would provide access to financial

industry leaders in New York who meet the study’s inclusion criteria. A second

assumption was that the participants’ self-reported details and behaviors reflected their

real-world attributes (Darko et al., 2022). In my study, I assumed that what the

participants described during interviews accurately reflected their actual leadership

practices and decisions within their organizations. An assumption of participant honesty

was necessary because I relied on the participants’ accounts to identify and explore

effective leadership strategies. Discrepancies between the participants’ self-reported

information and their real-world actions could influence the credibility of the findings.

Limitations

I improved the methodological rigor of the study by explicitly outlining the

study’s limitations. Limitations are potential weaknesses or constraints that stem from the

methodological decisions made throughout the research process (Taherdoost, 2022). The

study has several limitations stemming from the use of the qualitative method. A key

limitation is that I was central to data collection and interpretation, which can potentially

influence the findings through personal biases or perspectives (Kassan et al., 2020). The

sensitive nature of leadership strategies for deterring unethical behavior could affect how

I interpreted the participants' responses. I mitigated researcher bias through reflectivity,

using bracketing to maintain awareness of my own biases throughout the research

process.

Another common limitation of qualitative research is the use of small, purposive

samples. Small samples can reduce the transferability of findings to different contexts or

populations (Johnson et al., 2020). I chose to use purposive sampling of financial leaders

in New York, which could limit the broader applicability of the results. I addressed the

limitations of sampling bias by using thick descriptions, which involve providing detailed

accounts of the study’s phenomenon and participants. Providing thick descriptions can

mitigate limitations on transferability by enabling readers to assess whether the findings

are relevant and transferable to other settings or populations (Johnson et al., 2020). In

addition to limitations associated with the qualitative methodology, the study also has

limitations due to the choice of research design and conceptual framework.

The pragmatic inquiry design has limitations stemming from its focus on

pragmatism. Pragmatic inquiry research focuses on problem-solving and practical

outcomes, which can lead to insufficient theoretical depth (Morgan, 2014). Pragmatic

inquiry researchers prioritize actionable solutions over the development of abstract

theory, leading to context-specific findings, which can limit generalizability beyond the

immediate scope of the study (Kelly & Cordeiro, 2020). In my study, limitations

stemming from choosing the pragmatic inquiry design could manifest as a challenge in

generalizing the findings to other industries or regions. The strategies identified may also

not be as widely applicable or theoretically robust as those derived from other theory-

driven research designs (Morgan, 2014). I mitigated theoretical limitations by using

Kaptein’s (2008) CEV model to ground the study. In addition to limitations due to

qualitative methodology and pragmatic inquiry research design, the choice of theoretical

foundations also has limitations.

Kaptein’s (2008) CEV model provides a valuable framework for analyzing how

organizational culture influences ethical or unethical behavior, but the model also has

limitations. One limitation is that the CEV model focuses primarily on organizational

culture, potentially overlooking other critical factors influencing unethical behavior, such

as external pressures, regulatory environments, or individual psychological traits

(Kaptein, 2008). The CEV model may not fully capture the broader range of influences

that can drive unethical behavior within financial institutions, such as economic or

competitive pressures specific to the industry. Another limitation of the CEV model is its

assumption that ethical culture can be uniformly applied across different organizational

levels, which may not always be true. In financial institutions, the ethical culture

promoted by upper management may not always be consistently reflected or adopted at

the employee level (Martínez et al., 2021), potentially leading to gaps in understanding. I

mitigated the limitation of cultural penetrance by including an interview question

explicitly exploring how ethical culture differs across organizational levels.

The study has limitations associated with the chosen methods, including

purposive sampling. Purposive sampling can produce sampling bias because the

researcher judges whether participants are qualified (Andrade, 2021). I mitigated

sampling bias by using snowball sampling as a secondary sampling method, which can

reduce sampling bias associated with purposive sampling (Leighton et al., 2021). I also

ensured transparency by providing a detailed explanation of the inclusion criteria for

participant selection, allowing readers to evaluate the appropriateness of the sample and

reduce concerns about bias.

Semistructured interviews as a data collection method have limitations.

Participants can give biased responses, particularly when discussing sensitive topics like

unethical behavior (Tavory, 2020). Social desirability bias may lead the participants to

present themselves or their organizations in a more favorable light, affecting the accuracy

of the data (Bernardi & Nash, 2023). In the context of my study, the participating leaders

may downplay unethical practices or exaggerate their commitment to ethical standards. I

mitigated social desirability bias using informed consent to explain to participants how I

would protect their confidentiality and that of their organizations.

Analysis of publicly available documents in the study also has limitations for data

collection. Publicly available information on company websites or social media pages

often focuses on positively presenting the organization (Heavey et al., 2020). Social

media platforms are primarily used for marketing or public relations and may not provide

comprehensive or unbiased insights into the company’s internal practices, especially

regarding ethical leadership and employee behavior. Websites and social media pages

also tend to present static, outdated content that may not reflect the company’s current

practices (Bouvier & Machin, 2020). The information provided might be outdated,

limiting its relevance for understanding the leaders’ current strategies for deterring

unethical behavior. I mitigated the limitations of using social media pages and websites

as a data source by including publicly available external audits, reviews, or reports by

third parties, such as regulatory bodies, independent ethics audits, or industry watchdogs.

Financial records can provide a more objective perspective on the company's ethical

practices, potentially counterbalancing the promotional materials found on organization

websites and social media.

Transition

This study addressed the general business problem that some employees within

the U.S. financial industry engage in unethical business practices, leading to a tarnished

organizational reputation and the loss of shareholder trust. Addressing unethical business

practices is important because unethical behavior in financial institutions can lead to

legal, financial, and reputational damage, undermining stakeholder trust and destabilizing

broader economic systems (Mishra et al., 2021). In Section 1, I introduced the problem,

purpose, and research question of the study. I also discussed the study’s assumptions and

limitations, providing a critical analysis of how the chosen methods could influence the

findings by potentially introducing bias and limiting the transferability of the findings.

Section 2 contains a review of the professional and academic literature

surrounding leadership strategies for deterring unethical behavior in the financial

industry. The literature review encompasses an examination of established approaches to

promoting ethical behavior, with a focus on strategies specifically tailored to the

regulatory, economic, and organizational complexities unique to the financial sector. In

the review, I examine how leadership, ethical communication practices, and

organizational culture impact the implementation of ethical strategies in high-pressure

environments within financial institutions, where unethical behavior can have far-

reaching consequences for both individual organizations and the broader economy.

Section 3 describes the study’s specific methodology for participant recruitment,

sampling and data collection, organization, and analysis. In Section 4, I present the

study’s findings and discussed implications for business practice and positive social

change. Section 4 also contains recommendations for practice and future research.

Section 2: The Literature Review

A Review of the Professional and Academic Literature

Unethical behavior in the financial industry has become increasingly common

despite regulatory measures against financial misconduct. Scholars suggest that financial

organization leaders need to prioritize the development of an ethical culture to effectively

deter unethical behavior among employees (AlKhouri et al., 2024). Changing

organizational culture to embrace ethics is a long and systematic process requiring

consistent effort (Naveed et al., 2022). The longstanding culture of unethical behavior in

financial institutions is a hindrance to adopting ethical practices (Keneley, 2023).

Financial business leaders need effective strategies to deter employee unethical behavior

to remain productive, competitive, and relevant in the financial sector.

Section 2 is organized into two main sections. The first section explored the

study’s conceptual framework, which consists of Kaptein’s (2008) CEV model and a

contrasting theory, Cressey’s (1953) fraud triangle theory. The constructs of each theory

are described and applied to understanding employees’ unethical behavior in financial

institutions. The second main section presented a review and synthesis of the literature on

unethical behavior in financial organizations. I specifically discussed the challenges

present in the industry, current strategies used to deter unethical behavior, leadership

styles, processes, and systems for deterring unethical behavior, and the role of

organizational culture in fostering ethical behavior.

There were 162 total references used in the Literature Review section of this

study, of which 155 of the references (95.7%) were published between 2020 and 2025.

There were a total of 152 peer-reviewed articles, representing 93.8% of the references,

and 149 of those peer-reviewed articles (98.0%) were published between 2020 and 2025.

Seven (4.3%) of the sources were dated before 2020, including four peer-reviewed

articles (2.5%), three books (1.9%), and zero web articles.

Conceptual Framework

The study’s conceptual framework is based on Kaptein’s (2008) CEV model. In

this section, I describe each construct in Kaptein’s model and discussed the application of

the model to ethical behavior in the financial industry. I also consider a contrasting

theory, Cressey’s (1953) fraud triangle theory, describing its constructs. I also explain

why Kaptein’s CEV model is more suited to analyzing the specific business problem

identified in the study.

Kaptein’s Corporate Ethics Virtue Model

Kaptein’s (2008) CEV model is the theoretical foundation underpinning the

study's design and analysis. Kaptein posited that organizations, like individuals, can

possess virtues that influence their moral behavior and collectively shape the ethical

character of a corporation. Kaptein specifically identified eight virtues that address

different aspects of ethical culture and behavior: clarity, congruency, feasibility,

supportability, transparency, discussability, sanctionability, and viability.

Clarity. Kaptein (2008) proposed that the clarity of ethical guidelines is a

considerable contributor to ethical culture and behaviors. Organizations with a solid

ethical culture provide clear guidelines about what constitutes ethical and unethical

behavior (Kuenzi et al., 2020). Kaptein believed that employees are more likely to act

ethically when they understand the organization’s values, policies, and expectations.

Jannat et al. (2022) described key elements involved in providing employees with clarity,

including having an ethical code, providing training programs that communicate ethical

standards, and clearly communicating ethical priorities. Financial organization leaders

can deter unethical behavior by providing employees with clarity about corporate ethical

guidelines and priorities.

Congruency. Kaptein (2008) believed that ethical standards should be congruent

with leaders’ behaviors and actions. Kaptein defined congruency as an alignment

between the organization’s stated values and the behavior of its leaders and managers.

Employees are less likely to engage in unethical behavior if they see leaders modeling

ethical conduct. Fehr et al. (2020) found that employees have increased unethical

behavior and reacted to leaders’ unethical behavior by morally disengaging. Ethical

leadership can help promote the ethical behavior of followers, but Wang et al. (2021)

found that the extent that followers emulate their ethical leaders is contingent on their

moral identity and identification with the leader. The findings suggested that financial

corporation leaders can promote an ethical workplace culture by modeling ethical

practices and ensuring proper alignment with employees.

Feasibility. Kaptein articulated that forming an ethical culture hinges on the

feasibility of building a culture within an organization. Organization leaders should

ensure employees have the resources, time, and support needed to meet ethical

expectations (Kaptein, 2008). Employees are more likely to engage in ethical behavior

when they are not pressured or forced to cut corners to meet unrealistic targets.

Historically, financial organization employees have engaged in unethical behavior when

pressured to meet performance targets or quarterly sales requirements (van Steenbergen

et al., 2023). Bank of America and Wells Fargo recently changed their incentive

structures to focus on client-centric metrics, such as customer satisfaction and long-term

client retention, rather than the volume of financial transactions or accounts (Welch,

2023). Financial organization leaders can promote the feasibility of an ethical culture by

ensuring that performance goals align with ethical standards.

Supportability. Supportability involves organization leaders fostering a

commitment to ethical behavior by supporting employees’ moral values and integrity.

Kaptein (2008) argued that employees will uphold ethical standards when they feel

personally connected to the organization’s values. Organizational leaders can support

employees’ ethical behavior by rewarding and incentivizing superlative ethical behavior

(Carton, 2022). Babri et al. (2021) described how including ethics in employee

performance appraisals can promote an ethical corporate culture. Barclays emphasized

ethical role modeling in its leadership training programs after its LIBOR manipulation

scandal to address supportability (Batten et al., 2022). Corporation leaders can support

employees’ ethical practices by encouraging and appraising ethical behavior.

Transparency. Transparency involves being open about ethical policies and

priorities. Kaptein (2008) posited organization leaders could promote an ethical corporate

culture by ensuring that the consequences of actions and decisions are visible and openly

communicated. Employees are less likely to engage in unethical behavior if they believe

their actions will be observed, scrutinized, and analyzed (Kaptein, 2022). Organizations

can promote transparency through open communication about decision-making processes

and by having internal controls that monitor behavior. In the financial industry, numerous

organization leaders have adopted artificial intelligence (AI)-based methods for detecting

suspicious behavior and misconduct (Ridzuan et al., 2024). Financial organization leaders

can implement AI or machine learning technology to reinforce the transparency of ethical

actions in the company.

Discussability. Kaptein believed an ethical corporate culture includes open

discussion about ethical challenges and priorities. Organizations can promote

discussability by encouraging open discussion about ethical dilemmas, concerns, and

potential misconduct (Roy et al., 2024). Leaders can promote discussability by

facilitating psychological safety. Employees are more likely to report concerns or seek

guidance when they feel safe discussing ethical issues (Trevino & Nelson, 2021). Several

financial organizations have approached discussability through forums and ethics

committees. HSBC has established regional and global ethics committees to review and

address ethical challenges, ensuring alignment with its core values (Barber, 2021).

Financial organization leaders can deter unethical behavior by fostering an environment

where ethical concerns can be openly discussed.

Sanctionability. An ethical corporate culture includes sanctions for misconduct.

Kaptein (2008) believed that an organization should enforce consequences for unethical

behavior and reward ethical conduct consistently. Incentivizing ethical behavior can deter

employees from misconduct because employees will see that unethical behavior leads to

clear and fair consequences. Leaders can promote sanctionability by having fair and

consistent consequences for unethical behavior (Resende et al., 2024). Sanctionability

should be applied regardless of an employee’s rank. Following compliance failures,

Deutsche Bank publicly terminated several high-ranking executives to reinforce its zero-

tolerance policy on ethical violations (Gilbert et al., 2024). Some organizations also

communicate their enforcement of ethical policies externally, building trust with

stakeholders and deterring unethical behavior (Burdon & Sorour, 2020). Barclays

publishes an annual ethics and conduct report detailing cases of misconduct, the actions

taken, and policy improvements. Financial organization leaders can promote ethical

culture through sanctionability.

Viability. The final construct in Kaptein’s (2008) CEV model is viability. The

ethical culture of an organization has viability when the organization maintains and

reinforces ethical behavior over time (Kaptein, 2022). Kaptein believed that ethical

behavior is sustained when the organization continuously adapts and reinforces its ethical

culture. Organizational leaders can promote viability by regularly updating ethical

guidelines and training and through ongoing monitoring and assessment of the ethical

culture. JP Morgan Chase leaders revise the company’s code of conduct and ethical

training programs annually to incorporate lessons learned from recent cases and industry

best practices (Pitre & Claiborne, 2021). Citigroup actively monitors its ethical culture by

giving employees anonymous surveys to provide feedback. Organization leaders can

promote the viability of an ethical culture by continuously adapting to new ethical

challenges and industry standards.

Contrasting Theory: Cressey’s Fraud Triangle Theory

Fraud triangle theory attempts to explain the psychological and situational factors

that lead individuals to commit unethical or fraudulent acts. Cressey (1953) identified

three key elements: pressure, opportunity, and rationalization. Pressure is the financial,

personal, or organizational stress that compels an individual to consider fraudulent

behavior as a solution (Egiyi & Chindengwike, 2023). Individuals facing significant

pressure may feel compelled to commit unethical acts if they do not have a vision of how

to resolve their problems through legitimate means. Cressey identified three types of

pressure: financial, workplace, and other pressures. Personal financial difficulties, such as

debts, medical expenses, or lifestyle expectations, can lead to unethical behavior (Lin et

al., 2022). Workplace pressures include unrealistic performance targets, job insecurity, or

fear of demotion. Personal conflicts, addiction, or maintaining status or lifestyle can also

influence employees to commit misconduct (Cressey, 1953). Various types of pressure

can drive employees to commit fraud or engage in misconduct.

The second construct in the fraud triangle theory is opportunity. Opportunity

refers to the circumstances or weaknesses in systems, controls, or oversight that allow

fraud to occur without being detected (Cressey, 1953). Fraud triangle theory posits that

an individual is more likely to commit fraud if they perceive that they can successfully

execute and conceal their actions. Several factors can enhance an employee’s opportunity

to commit fraud, including weak internal controls, access to resources, and ineffective

monitoring (Rashid, 2022). Weak internal controls include inadequate supervision, poor

segregation of duties, or lack of automated checks. Employees with unrestricted access to

financial accounts, sensitive data, or physical assets also have enhanced opportunities for

financial misconduct (Roszkowska, 2021). Cressey (1953) believed that opportunity is

the enabler of fraud. Even if someone feels pressured and rationalizes their actions, they

cannot commit fraud without a perceived opportunity. Reducing opportunities for

misconduct can help deter unethical behavior in the financial industry.

The third construct in the fraud triangle theory is rationalization. Cressey (1953)

described rationalization as the cognitive justification that individuals use to make their

fraudulent actions acceptable in their own minds. Individuals can avoid feelings of guilt

or conflict by convincing themselves that their behavior is justified or harmless. Common

rationalizations include minimizing the impact of unethical actions, denial of

responsibility, and entitlement (Majstorović & Petrović, 2022). Denial of responsibility is

a common rationalization among individuals who commit financial misconduct

(Klimczak et al., 2022). Corporate culture can also be a rationalization if employees

assume that unethical behavior is the norm (Veetikazhi et al., 2022). Rationalization is

the psychological mechanism that allows individuals to align fraudulent behavior with

their personal ethics, reducing cognitive dissonance.

Suitability of the CEV Model for Exploring Strategies to Deter Unethical Behavior

The CEV model is better suited for analyzing the strategies leaders use to deter

unethical behavior in financial organizations compared to the fraud triangle theory. The

CEV model provides a systemic, organizational-level framework that focuses on building

a sustainable, ethical culture, whereas the fraud triangle theory primarily focuses on

individual behavior and situational triggers. The fraud triangle theory primarily operates

at the individual level (Cressey, 1953). The CEV model takes a broader approach to

understanding corporate ethics by focusing on the role of an organization in shaping

culture and establishing ethical norms (Kaptein, 2008). The fraud triangle theory does not

address how leaders can create an overarching culture that discourages unethical behavior

across the organization. The CEV model can be used to analyze strategies leaders use to

build a proactive, ethics-driven environment that deters unethical behavior through

systemic changes.

The CEV model is also more suitable for the study’s specific business problem

because the model focuses on proactive measures, compared to the reactive focus on

fraud triangle theory. Scholars can use the CEV model to analyze proactive approaches to

ethical culture by exploring how leaders incorporate virtues into organizational practices,

thereby preventing unethical behavior before it arises (Constantinescu & Kaptein,

2021). In contrast, the fraud triangle theory is reactive, identifying individual triggers that

lead to unethical behavior after it has occurred (Maulidi & Ansell, 2021). The fraud

triangle theory is useful for detecting and addressing existing issues, but the theory does

not emphasize long-term cultural transformation. The CEV model is better suited for this

aspect of my research.

Application to the Applied Business Problem

The purpose of this qualitative pragmatic inquiry study was to identify and

explore the effective strategies that some leaders in the U.S. financial industry use to

deter unethical employee behavior. The literature review is organized into five main

themes. The first theme explores reasons underlying unethical behavior in financial

institutions, highlighting various individual, cultural, and systemic factors contributing to

misconduct. The second theme describes strategies currently used in financial

organizations to deter unethical behavior. The third theme describes leadership styles that

help deter unethical behavior, focusing on the transformational, servant, democratic, and

authentic leadership styles. The fourth theme explores systems and processes that

effectively deter unethical behavior, including preventive and detective systems. The fifth

theme explores the influence of organizational culture on deterring employees from

unethical behavior. The literature review aims to provide a robust foundation for

understanding what is currently known about deterring unethical behavior in financial

organizations, providing a baseline for identifying novel strategies explored by the

study’s participants during the interviews.

Underlying Reasons for Unethical Behavior in Financial Organizations

Individual, cultural, and systemic factors underlie unethical behavior in the U.S.

financial industry. Unethical employee behavior in financial organizations can range

from fraud to conflicts of interest, often arising due to the unique pressures and dynamics

of the sector (van Steenbergen et al., 2023). In this section, I explore different aspects of

and reasons for unethical behavior in the financial industry to provide context for

strategies to deter such behavior. I consider individual-level factors, as well as cultural

and systemic factors, that contribute to financial employees’ unethical behavior.

Individual-Level Factors Influencing Unethical Behavior. Several individual-

level factors contribute to employees’ unethical behavior in financial organizations.

Individual-level factors are driven by financial professionals’ desire to increase personal

profits. Intense performance pressures are common in the financial industry. Such

standards can push employees to engage in unethical behavior to meet unrealistic

expectations (Kundro et al., 2023). Financial leaders can set aggressive revenue goals,

requiring employees to meet quotas for selling financial products or achieving investment

returns. Ametepe et al. (2023) found that employees’ engagement in banking fraud was

directly correlated with leading to misrepresentation or fraud. The findings indicated that

employees may engage in misrepresentation and fraud when they perceive their jobs to

be threatened by subpar performance compared to that of other employees or established

performance standards. The Wells Fargo scandal in 2016 substantiates this claim.

Employees, pressured to meet unrealistic sales goals, created millions of fake accounts

without customers’ consent, citing a toxic culture incentivizing deceit to meet targets

(San, 2023). Financial organization leaders could reduce unethical behavior by severing

the link between employee product sales and employment contingency.

Financial organizations tend to measure performance according to quarterly

earnings, which can lead to pressure on employees. Investors often scrutinize quarterly

earnings, driving employees to unethical practices to meet immediate performance

benchmarks at the expense of long-term stability (Ding et al., 2020). Shi et al. (2023)

examined consumer complaint data filed with the Consumer Financial Protection Bureau

against financial institutions, finding that customer complaints increased by 13.3% in the

quarter after an institution narrowly met its performance benchmarks. The authors

observed the relationship to be stronger when bank CEOs receive a greater proportion of

incentive-based compensation. The findings suggest that pressure to meet earnings

standards can lead to unethical behavior.

In part, pressures to meet financial benchmarks can derive from misaligned

incentive structures. Compensation models in the financial industry often prioritize

individual gains through bonuses and commissions over ethical behavior, encouraging

excessive risk-taking (Fernández-Muñiz et al., 2022). Many financial institutions have

bonus structures tied to risky investments, incentivizing employees to prioritize profits

over ethics (Thirion et al., 2022). Employees selling products to customers may push

inappropriate or risky financial products to maximize commissions. Lux et al. (2023)

examined the compensation structure of executives involved in frauds compared to the

compensation structure of executives in a peer control group using archival data

consisting of frauds identified through Securities and Exchange Commission Accounting

and Auditing Enforcement Releases. The authors found a significant difference in the two

groups’ compensation structures, indicating that the compensation structure influences

the deliberate action of fraud. The empirical findings suggest that the performance

standards tied to compensation and bonuses can result in unethical behavior in the

financial industry, often stemming from leaders’ actions.

The empirical literature contained several examples of cases where misaligned

incentive structures led to unethical employee behavior. Scholars attribute the 2008

mortgage crisis to organizations’ incentive structures. Mortgage brokers approved risky

subprime loans to earn higher commissions, contributing to the financial crisis (Tori et

al., 2023). The Libor scandal in 2012 is another example. Traders from multiple banks

manipulated the London Interbank Offered Rate to increase their trading profits while

customers bore the risk; JP Morgan Chase was implicated in this scandal (Wiggs, 2022).

In both cases, employees engaged in unethical behavior to increase personal profits

through commissions and bonuses.

Conflicts of interest are pervasive in the financial industry. Individuals and

institutions often have dual roles that can compromise their ethical obligations (Zheng &

Yan, 2021). Financial professionals acting as both advisors and traders may prioritize

their profits over clients’ best interests (Spatt, 2020). Financial advisors may also

recommend products or investments that are not in a client’s best interest to earn higher

commissions. In 2007, Goldman Sachs reportedly sold mortgage-backed securities to

clients while simultaneously betting against them in proprietary trading, profiting from

client losses (Turk, 2022). Goldman Sachs’ conflicts of interest contributed to the 2008

financial crisis when millions of customers defaulted on their mortgages. Conflicts of

interest can improve financial professionals’ profits while customers incur losses.

Cultural Factors Influencing Unethical Behavior. Cultural factors influencing

employees’ unethical behaviors stem from the shared norms, values, and practices within

financial institutions. Cultural factors influence how employees collectively behave and

perceive ethical boundaries (Mo et al., 2023). Cultural norms within financial firms can

normalize unethical practices, creating ethical blindspots (McGrath & Walker, 2022).

Kump and Scholz (2022) found that organizational routines can cause ethical blindness

and have a prominent role in fostering unintentional unethical behavior. Scholars attribute

a culture of risk-taking and aggressive growth at Lehman Brothers as contributing to the

firm's bankruptcy during the 2008 financial crisis, leading employees to ignore red flags

(Karim & Mofid, 2021). Risk-taking cultures can also pressure employees to conform to

organizational culture. An unethical culture in financial organizations can create an

environment that prioritizes unethical behavior, leading to the normalization of such

behaviors.

Weak ethical leadership is another cultural factor contributing to employees’

unethical behavior in financial organizations. Poor leadership and a lack of ethical role

models create an environment where unethical behavior is overlooked or encouraged.

Cialdini et al. (2021) conducted an experimental study drawing on the attraction–

selection–attrition model of organizational behavior, finding that unethical leader

behavior results in the retention of group members who are comfortable with dishonesty

and are likely to engage in unethical behavior. Lian et al. (2022) substantiated these

findings, exploring how leaders’ unethical pro-organizational behavior contributes to

employee unethical conduct. The authors found that employees abstract and learn

unethical behaviors through observational learning of leaders. The findings collectively

indicate that leaders can influence the unethical behaviors of employees.

Several scholars discussed specific examples of weak ethical leadership in

financial organizations. Enron CEO Jeffrey Skilling actively encouraged unethical

accounting practices to inflate stock prices, leading to the company’s collapse in 2001

(San, 2023). This example suggests that profit-driven leadership at the expense of ethics

can set a cultural tone that misconduct is acceptable. Leaders can also contribute to

misconduct by failing to address ethical lapses. The UBS Rogue Trader Scandal in 2011

occurred when a lack of leadership oversight allowed a trader to engage in unauthorized

trades, leading to a $2 billion loss (Kashyap, 2021). Leaders who fail to address unethical

behavior or actively promote it can create a values system in organizations that prioritizes

profit over ethics, leading to a weak ethical environment.

Systemic Factors Influencing Unethical Behavior. Systemic factors

influencing unethical behavior derive from the broader structures, policies, and

frameworks that govern the financial industry. The complexity and opacity of financial

products is a major contributing factor. Many consumers do not fully understand

financial products and investments, leading to a reliance on financial advisors (Zhang et

al., 2021). Klapper and Lusardi (2020) estimated that only one in three consumers are

financially literate; clients often lack the expertise to understand the risks associated with

complex financial products. Financial jargon and opaque investment structures make it

challenging for regulators and clients to detect misconduct (Camarda et al., 2023). The

complexity of financial products and services simultaneously creates a reliance on

financial advisors and obfuscates financial misconduct.

Lack of accountability is another systemic factor contributing to unethical

behavior. Systemic failures in regulatory oversight and enforcement perpetuate financial

misconduct (Adaga et al., 2024). In large organizations, decisions are often fragmented

across teams, leading to situations where no single individual feels accountable for

unethical actions (Kump & Scholz, 2022). In the JP Morgan London Whale Scandal,

traders in London made risky derivative trades that resulted in a $6 billion loss facilitated

by internal controls and poor oversight (Rafeld et al., 2020). Lack of oversight from

leaders can create a corporate environment with diffuse ethical responsibility, leading to a

majority of individuals committing small misconduct offenses that cumulatively add to

widespread misconduct.

Financial professionals can leverage regulatory loopholes to engage in

misconduct. Financial innovation often outpaces regulation, leaving gaps that unethical

individuals exploit (Zreik & Iqbal, 2025). The 2008 financial crisis is largely attributed to

an attitude that large banks were too big to fail, with financial leaders having an implicit

understanding that the government would step in to prevent failure (Blake, 2022).

Financial professionals engaged in reckless lending and trading practices, knowing they

would likely receive government bailouts if they failed. In the case of the 2008 financial

crisis, regulators were reluctant to prosecute major banks for fear of economic fallout,

which allowed unethical behavior to go largely unpunished (Taub, 2021). Large firms can

be treated leniently due to their economic importance, incentivizing unethical behavior.

Strategies to Deter Unethical Behavior in Financial Organizations

The individual, cultural, and systemic factors influencing employees’ unethical

behavior in the financial industry suggest several strategies to deter unethical behavior. In

this section, I explore strategies that are discussed in the literature. I include five

strategies in this review: strengthening ethical leadership, implementing clear ethical

standards, aligning incentive structures with ethical behaviors, strengthening internal

controls and monitoring, and reinforcing regulatory compliance.

Strengthening Ethical Leadership. Strengthening ethical leadership can help

financial organizations deter unethical behavior. Ethical leadership is a cornerstone of

promoting integrity and deterring in organizational settings (Sofyan & Susanto, 2024).

Leaders shape organizational culture and provide a foundation for acceptable behavior.

Sofyan and Susanto (2024) conducted a meta-analysis, finding that ethical leadership has

a positive correlation with transformational and transactional leadership and has a

positive impact on employees’ job satisfaction and pro-environmental behavior.

Employees tend to emulate the behaviors of leaders who show integrity in decision-

making, suggesting that leaders should demonstrate ethical behavior publicly and

consistently (Mohi Ud Din & Zhang, 2023). Al Halbusi et al. (2021) examined the

relationship between ethical leadership and employees’ ethical behavior, finding a

positive correlation between the two constructs in a sample of 300 employees. The

findings suggest that ethical leadership can deter unethical behavior in employees.

Corporate executives can enhance ethical leadership by establishing ethical

decision-making frameworks. Ethical leadership training can provide leaders with the

tools and knowledge to assess the moral implications of business decisions (Markey et

al., 2021). Halvorsen et al. (2022) examined ethical behavior in a sample of 187 bank

employees, finding a positive relationship between ethical training, ethical climate,

ethical leadership, and employee performance. The results suggest that ethical training

can improve the ethical culture in organizations by contributing to the development of

ethical leaders. An important component of ethical leadership is accountability. Leaders

who accept responsibility for the outcomes of their decisions promote a culture where

employees do the same (Martínez et al., 2021). Leaders can contribute positively to

employees’ ethical behavior by modeling ethical decision-making and actions.

Scholars highlighted several actionable steps to strengthen ethical leadership.

Executives can conduct ethics workshops for senior leaders, emphasizing their role in

fostering a culture of accountability (Al Halbusi et al., 2021). Ethical workshops can give

leaders an ethical foundation for conducting business operations and safeguarding clients’

interests. Executives can also implement ethical key performance indicators to evaluate

department heads and managers (Camilleri, 2021). A percentage of employees’

performance reviews can be devoted to evaluating ethical performance, which signals to

employees and leaders the importance of ethical standards. By establishing and enforcing

ethical standards, corporate leaders can prioritize the development and maintenance of an

ethical climate.

Implementing Clear Ethical Standards. Leaders can only enforce ethical

behavior if ethical standards of conduct are clearly delineated. A robust code of conduct

is a blueprint for ethical behavior, outlining expected actions and potential repercussions

for violations (Klimczak et al., 2022). Corporate leaders can customize their ethical code

to address challenges specific to the financial industry, such as insider trading, money

laundering, and data misuse. Standards could also be established to address corporation-

specific goals based on the types of financial products and services offered by individual

companies. Abbas and Ayub (2021) found that implementing an ethical code had a strong

negative correlation with employees’ unethical behavior, suggesting that developing and

enforcing ethical standards deters unethical behavior.

A well-crafted ethical code is clear, transparent, and accessible. Leaders should

make the company’s ethical code available to all employees through digital platforms and

physical handbooks (Ibiricu & Van der Made, 2020). Ethical scholars indicate that a

company’s ethical code should reflect the organization’s values to be effective (Karpoff,

2021). Financial firm HSBC integrates its ethical guidelines into employee training to

make them actionable, establishing ethical standards when an employee begins with the

organization (Balboni & Francis, 2023). Corporate leaders can facilitate an ethical culture

by establishing ethical standards and making them readily accessible to employees.

Implementing an ethical code sends a clear message to employees that an organization

prioritizes ethical responsibility.

Scholars have several suggestions on items to include in a comprehensive ethical

code. Adeniran et al. (2024) suggested that companies should highlight the importance of

adhering to all applicable local, national, and international laws, regulations, and industry

standards. Best practices include developing guidelines for anti-money laundering, anti-

bribery, and anti-corruption compliance and emphasizing adherence to financial reporting

standards and regulatory frameworks. Financial organization leaders should provide clear

guidance on identifying, disclosing, and managing conflicts of interest (Garrett, 2024).

Best practices for conflicts of interest include requiring employees to disclose personal

financial interests that may conflict with their professional responsibilities, prohibiting

employees from using insider information for personal gain, and including various

examples of common conflicts. Organizations can deter unethical employee behavior by

implementing best practices for regulatory adherence and conflicts of interests.

Align Incentive Structures With Ethical Behaviors. In the previous section, I

discussed how misaligned incentive structures lead to employees engaging in unethical

behavior. Organizational leaders can help deter unethical behavior by aligning

compensation models to reward ethical practices in addition to performance (Kuenzi et

al., 2020). Performance metrics can be balanced by incorporating ethical behavior into

performance appraisals, giving it equal weight to financial achievements. Bonus

structures can also be redefined to introduce financial incentives for employees who

demonstrate integrity and customer-first behavior. Park et al. (2022) found that an

incentive structure that includes compliance with ethical standards promotes employees’

pro-ethical behaviors. The findings suggest that incentivizing ethical behavior can help

reduce ethical misconduct in financial organizations.

Several financial companies have taken steps to align incentive structures with

ethical behavior, recognizing the importance of prioritizing long-term trust, sustainability,

and customer satisfaction over short-term profits. Bank of America revised its incentive

structure after the Wells Fargo scandal, where aggressive sales targets led to unethical

behavior (Welch, 2023). The bank introduced customer satisfaction as a key performance

metric instead of rewarding employees based on product sales. Executive compensation

included long-term incentives tied to the bank’s overall financial health and ethical

reputation. Bank of America benefited from these changes, which improved trust with

customers and regulators by demonstrating a commitment to ethical practices (Jones,

2021). Bank of America leaders reduced the risk of unethical sales practices and

improved employee morale by reducing undue pressure.

Goldman Sachs is another example of a financial corporation that revised its

incentive structure, mainly targeting leadership. The company ties a significant portion of

executive compensation to long-term economic health, with bonuses deferred over

several years (Gan et al., 2020). If misconduct occurs during this period, executives may

be required to forfeit their bonuses. Gan et al. (2020) found that non-financial

performance positively influences a firm’s future value. At the investor level, corporation

leaders tied bonuses to the success and satisfaction of client portfolios rather than the

volume of transactions (Urban et al., 2022). These measures incentivized employees and

executives to prioritize ethical behaviors, which improved the alignment between

employee incentives and client interests. By redesigning organization incentive

structures, corporation leaders can reduce risky, high-frequency trading practices that

prioritize volume over value.

Strengthen Internal Controls and Monitoring. Another strategy to deter

employees from engaging in unethical behavior is to strengthen internal controls and

monitoring. Strong internal controls deter unethical behavior by reducing opportunities

for misconduct and improving detection mechanisms (Bonrath & Eulerich, 2024). Recent

technological advancement can help facilitate internal monitoring. Leaders can leverage

AI and machine learning to monitor transactions for signs of fraud, insider trading, or

conflicts of interest (Lyeonov et al., 2024). Chirra (2020) explored the use of AI and

machine learning for detecting fraud in financial transactions, explaining how AI systems

adapt to new fraud patterns by continuously learning from vast datasets. The ability of AI

to learn enables predictive insights that go beyond traditional rule-based fraud detection

systems, increasing protection against emerging threats, minimizing false positives, and

improving the efficiency of fraud response processes. AI and other emergent technologies

can be applied to fraud detection in financial organizations.

While AI can be used for continuous monitoring, the technology has flaws. The

efficacy of AI is dependent on the data used to train the technology (Pattyam, 2020). Best

practices for internal monitoring involve conducting frequent and random audits using

other forms of data analytics to identify anomalies (Christ et al., 2021). Wells Fargo

changed its internal control and audit systems after the 2016 scandal involving the

creation of unauthorized accounts. The company strengthened its internal audit processes

by increasing the frequency of audits and by hiring external auditors to provide

independent oversight (Kotb et al., 2020). Corporation leaders implemented a new risk

management framework that included centralized monitoring of employee activities.

Wells Fargo also directly addressed the source of the 2016 scandal by introducing

systems to ensure that customer consent is verified for all account openings and financial

product sales. Noel and Osman (2024) argued that Wells Fargo successfully reformed its

internal controls to detect and address fraudulent activities robustly. Financial institution

leaders can help deter unethical behavior by developing a strong system for internal

monitoring and auditing.

Leadership Styles to Deter Unethical Behaviors

Several leadership styles can be used to promote ethical conduct and deter

unethical behaviors in financial institutions. Several leadership styles emphasize

integrity, accountability, transparency, and a strong ethical culture (Mohi Ud Din &

Zhang, 2023). Leadership can actively help create environments where employees feel

empowered to act ethically. In this section, I review four leadership styles that can

facilitate the development of an ethical culture: transformational, servant, democratic,

and authentic leadership.

Transformational Leadership. Transformational leadership can help inspire

employees to act ethically. Transformational leadership has four components: idealized

influence, individualized consideration, inspirational motivation, and intellectual

stimulation (Deng et al., 2023). Transformational leaders emphasize a clear vision,

ethical goals, and personal accountability, which can help facilitate ethical behavior.

Transformational leaders specifically use idealized influence to consistently demonstrate

ethical behavior, serving as role models for their teams (Berkovich & Eyal, 2021).

Employees can look to transformational leaders as examples of ethical behaviors.

Berkovich and Eyal (2021) described how transformational leaders set a tone of integrity

at the top, reducing ambiguity about acceptable behaviors. Employees become motivated

to act ethically because they see their leaders acting with moral authority.

Several financial organization leaders have a transformational leadership style.

Warren Buffett, the CEO and chairman of Berkshire Hathaway, emphasizes transparency,

integrity, and ethical investing (Jensen et al., 2020). Buffett actively promotes ethical

behavior by emphasizing long-term value creation over short-term profits, inspiring

confidence among investors, employees, and stakeholders. Buffett also exemplifies

ethical behavior by publicly accepting responsibility for mistakes and expects the same

from his team (Doorley & Garcia, 2020). Christine Lagarde, President of the European

Central Bank, uses idealized influence to establish herself as a moral authority,

advocating for global economic fairness and insisting on transparency in monetary policy

decisions (Avakian & Fotaki, 2024). Transformational leaders promote and encourage

ethical actions by modeling ethical behavior through idealized influence.

Transformational leaders also encourage ethical behavior through inspirational

motivation. Leaders with a transformational style articulate a compelling vision that

inspires employees to align their behavior with organizational values and ethical

principles (Changar & Atan, 2021). Inspirational motivation helps align employees with

customer well-being, sustainability, or other organizational goals. Larry Fink, chairman

and CEO of BlackRock, writes letters to other CEOs consistently emphasizing the

importance of environmental, social, and governance goals (Thompson, 2024). Fink

promotes a vision of capitalism that balances the needs of shareholders with those of

employees, communities, and the environment, framing ethical investing as a long-term

necessity. Transformational leaders can use inspirational motivation to promote ethical

behavior in financial organizations.

Transformational leaders can also deter unethical behavior through individualized

consideration. Leaders exhibit individualized consideration by providing personalized

support, mentorship, and attention to employees’ needs and, in the case of ethics,

employees’ ethical development (Akdere & Egan, 2020). Individualized consideration

encourages ethical behavior because employees are more likely to act ethically when they

feel valued, supported, and aligned with their personal goals (Dey et al., 2022). Leaders

may also help employees identify and address ethical blindspots through individualized

consideration. Tang et al. (2024) found that individualized consideration helps build a

strong sense of loyalty and ethical accountability among employees. Transformational

leaders using individualized consideration can help promote ethical behavior from

employees.

Servant Leadership. Servant leadership is another leadership style that deters

unethical behavior. Servant leaders prioritize the well-being of their employees, clients,

and stakeholders, emphasizing ethical decision-making that serves the greater good

(Lemoine et al., 2024). Key traits of servant leaders are empathy, commitment to

community, and empowerment. Servant leaders use empathy to develop an understanding

of employee challenges and client needs, making decisions that benefit stakeholders and

avoiding harmful shortcuts. Servant leaders’ expressions of empathy mediate employees’

pro-organizational behavior (Elche et al., 2020). By focusing on employee well-being and

expressing empathy, Servant leaders reduce stress and the temptation to engage in

unethical behavior.

Servant leaders build trust and transparency and prioritize openness and honesty,

which helps build a culture of trust that discourages unethical behavior. Transparency in

decision-making is a key component of servant leadership. Servant leaders tend to

involve employees in decisions and openly communicate their reasoning behind

decisions, which reduces opportunities for hidden unethical practices (Roh et al., 2023).

Roh et al. (2023) surveyed employees using a three-wave, time-lagged research design

examining the relationship between servant leadership, psychological safety, and

negative employee behaviors. The results indicated that servant leadership significantly

increased employees’ psychological safety and showed a strong negative correlation with

negative employee behaviors. The findings suggest that servant leaders promote an

ethical culture by establishing an environment where employees feel safe to address

concerns. Employees feel safe discussing ethical dilemmas or reporting concerns,

knowing they won’t face retaliation.

Servant leaders empower employees to make ethical decisions. Servant leaders

give employees autonomy while ensuring they have the tools and training to make ethical

choices (Zhu et al., 2022). The influence of servant leadership may depend on the

inclinations of individual employees. Wu et al. (2021) manipulated managers’ servant

leadership behaviors and examined employees’ behaviors. The authors found that the

positive relationship between managers’ servant leadership and followers’ serving

behaviors was significantly enhanced for participants with high self-interests. The serving

behaviors of participants with low self-interest were not affected by the degree to which

the manager practiced servant leadership. In another experimental study, Wu et al.

demonstrated that followers’ serving self-efficacy mediated the interactional effect found

in the first study, supporting the hypothesis that social learning accounts for the

transference of managers’ servant leadership to followers’ serving behaviors. The

findings suggest that leaders can facilitate ethical behavior in employees by working to

enhance employees’ self-efficacy.

Democratic Leadership. Democratic leadership supports ethical behavior and

deters unethical practices by fostering collaboration, inclusion, and shared accountability.

The democratic leadership style emphasizes the participation of employees in decision-

making, which helps create a culture of transparency, trust, and mutual responsibility

(Hilton et al., 2021). Employees’ active involvement in decision-making can promote a

sense of ownership and accountability for ethical outcomes. Democratic leaders discuss

organizational challenges, ethical dilemmas, and decisions openly with their teams,

ensuring diverse perspectives are considered (Nedelko & Potocan, 2021). Antunez et al.

(2024) found that open communication deters unethical behavior in finance

organizations. By openly communicating about decisions, leaders deter employees from

unethical behaviors by making them active stakeholders in decisions. Democratic

leaders’ emphasis on employee involvement helps reduce unethical behavior.

Democratic leaders also demonstrate that ethical behavior is a shared

responsibility. Extension of accountability helps foster an ethical culture where everyone

is accountable for maintaining integrity (Stewart et al., 2023). Team-based accountability

encourages employees to hold themselves and their peers accountable for ethical conduct

(AlKhouri et al., 2024). A team-based approach makes financial organizations stronger,

suggesting that team-based leadership can foster ethical behavior and organizational

productivity (Manzi & Martinelli, 2022). Onesti (2023) examined the relationship

between democratic leadership, employee well-being, and ethical climate, finding that

democratic leadership was positively correlated with both variables. The findings

collectively suggest that democratic leadership influences a positive ethical climate by

promoting employee well-being.

Democratic leadership reduces unethical behavior by reducing power imbalances.

Democratic leaders minimize hierarchical barriers, creating an environment where

employees feel their voices matter, regardless of employees’ views or positions (Boutwell

& Smith, 2023). Zhang and Wei (2024) conducted a meta-analysis on 132 samples

reported in 95 articles, finding that power is positively related to unethical behavior. By

distributing decision-making among team members, democratic leaders reduce the

influence of power on employees’ unethical behavior, fostering a climate that prioritizes

shared accountability. Democratic leaders encourage ethical behavior by being

approachable and actively listening to employee concerns (Ruck, 2022). Decisions are

not dominated by top-down directives, ensuring fairness and inclusivity. Democratic

leadership reduces the risk of unethical behavior being imposed by leaders without

sufficient scrutiny.

Authentic Leadership. Authentic leadership deters employee unethical behavior

by fostering trust, transparency, accountability, and ethical decision-making. Authentic

leaders prioritize self-awareness, balanced decision-making, and integrity (Almutairi et

al., 2024). The use of authentic leadership creates a culture that discourages misconduct

and empowers employees to uphold ethical standards. Like transformational leaders,

authentic leaders consistently act with integrity, demonstrating a commitment to ethical

principles that employees are encouraged to emulate (Obuba, 2023). Authentic leaders

also prioritize openness and honesty, fostering a culture of trust where unethical behavior

is less likely to thrive. Leaders with an authentic leadership style share the rationale

behind decisions and ethical considerations, allowing employees to understand the

reasons underlying ethical behavior (Gardner et al., 2021). By modeling ethical behavior

and making decisions transparently, authentic leaders discourage unethical behavior and

model superior behavior that employees can emulate.

Authentic leaders promote followers’ self-awareness, which aligns with fostering

ethical behaviors. Leaders align their actions with their core ethical beliefs, setting a

consistent standard for their own actions and those of employees (Crawford et al., 2020).

Employees are encouraged to reflect on their own values and align their actions with

ethical principles. Authentic leaders are also proficient at recognizing their own biases,

which helps them avoid favoritism and ethical blindspots. Steffens et al. (2021) found

that authentic leaders garner support when they are aware of who they are as individuals

and who they are as members of the collective they seek to lead. The findings suggest

that authentic leaders can align their behaviors with those of the collective to foster

ethical behavior. Authentic leaders can deter unethical behavior by aligning ethical

actions with the values and purpose of the employees.

Systems and Processes for Deterring Unethical Behavior

Executives can deter unethical behavior in financial institutions by designing

systems and processes to foster a culture of integrity, detect misconduct early, and

enforce accountability. Systems and processes can be broadly categorized into preventive

and detective measures (Shipley et al., 2022). Preventive measures include systems for

governance, leadership systems, risk management, compliance, and regulatory adherence.

Detective measures include systems for internal auditing and whistleblowers.

Preventive Systems and Processes. Strong governance and leadership systems

are important for preventing unethical behavior. Key processes include establishing an

ethical code of conduct, forming ethics committees, and modeling ethical behavior from

top leadership. I discussed previously how a clear, accessible code of ethics outlines

acceptable behavior and consequences for violations. Employees should be required to

sign and periodically reaffirm their adherence to the ethical code (Seifert et al., 2023).

Deutsche Bank redesigned its code of conduct to include explicit prohibitions on money

laundering, bribery, and conflicts of interest after facing multiple regulatory penalties

(Merz, 2024). Another process involves independent ethics committees, which oversee

ethical concerns, whistleblower reports, and compliance breaches (Pender et al., 2024).

Mohammadi et al. (2020) examined the effect of board and audit committee

characteristics on corporate social responsibility in companies listed on the stock

exchange, finding that board size and independence had a significant effect on corporate

social responsibility. The findings suggest that independent ethics committees can

effectively deter misconduct in financial institutions because members are distinct from

corporate players. Ethical codes of conduct and ethics committees can enhance the ethical

culture of financial organizations.

Risk management systems are another preventive system for deterring unethical

behavior. Effective risk management helps identify and mitigate ethical risks before they

escalate (Olaniyi et al., 2023). Key processes in risk management systems include risk

assessments, whistleblower protection programs, scenario analysis, and stress testing.

Financial institutions regularly assess potential ethical risks in trading, lending, and client

advisory services (Adaga et al., 2024). For example, HSBC implemented a global risk

assessment program that identifies and mitigates risks related to money laundering and

sanctions compliance (Velez, 2024). Whistleblower protection programs provide

employees with anonymous channels to report unethical behavior without fear of

retaliation (West & Bowman, 2020). Barclays provides the industry with an example of a

robust whistleblower protection program; their program “Speak Up” guarantees

confidentiality and is overseen by an independent panel to ensure fairness and objectivity.

Risk assessment programs can enhance employees’ ability to act ethically by identifying

threats to ethical standards and by providing employees with an objective way to provide

information on current unethical activities.

Detective Systems and Processes. Systems associated with compliance and

regulatory adherence can also deter unethical behavior through early detection. Financial

institutions can couple real-time monitoring with regular compliance audits. Real-time

monitoring involves using data analytics and similar technology to detect irregular

financial transactions or suspicious activity (Abikoye et al., 2024). This technology can

be used to detect risky investments, changes in trading activity, and unusual activity in

accounts, providing leaders with oversight over employees’ business activities. Leaders

can also use routine compliance audits to verify adherence to external regulations set by

the Securities and Exchange Commission (SEC) and internal ethical standards (Bell,

2020). Internal audits safeguard financial organizations by identifying potential ethical

violations and recommending improvements. Many organizations now hire independent

audit teams to operate independently of operational functions to ensure unbiased

oversight (Sinha et al., 2024). Internal auditing systems can help detect misconduct,

which can help deter employees from engaging in unethical behavior.

Training and awareness programs can help with the detection of unethical

activity. Regular training for leaders and employees can facilitate the recognition of

ethical challenges, improving company leaders’ ability to respond to misconduct.

Shonhadji and Maulidi (2021) examined the role of a whistleblowing system and fraud

awareness in deterring financial statement fraud among 13 reputable public accounting

firms. The authors found that increasing employees’ fraud awareness resulted in

employees recognizing fraud symptoms and typologies and allowed them to raise

concerns in good faith and on reasonable grounds. The findings suggest that employee

training programs can promote employees’ abilities to detect misconduct and empower

them to bring misconduct to leaders’ attention. Citigroup uses this approach to financial

misconduct by conducting annual ethics training, including role-specific modules for

compliance officers and traders (Wilmarth, 2014). Training and awareness programs can

help detect unethical behavior. Employees may be deterred from engaging in unethical

behavior with the knowledge that colleagues and leaders are trained to detect misconduct.

Whistleblowing channels are essential for the early detection of unethical

behavior. Key processes in whistleblower channels include anonymous reporting

channels and whistleblower protections. Anonymous reporting channels can encourage

whistleblowers to report illegal financial transactions and misconduct. Creating internal

channels of reporting and monitoring is a robust way to change the organizational culture

of targets (Kampourakis, 2021). Stubben and Welch (2020) examined the use and

efficacy of internal whistleblower systems, finding that internal whistleblower report

volume was negatively associated with the number and dollar amount of government

fines received and material lawsuits filed against the firm. In particular, the authors found

that a 10% increase in reports was correlated with a 2.0% decrease in the dollar amount

of government fines received and a 1.0% decrease in legal settlement amounts in

subsequent years. The findings suggest that anonymous reporting channels facilitate

employees’ whistleblowing activities and are efficacious at detecting crime, as evidenced

by a reduction in fines.

Whistleblower protection systems can also empower employees to report

unethical activities. Whistleblower protections should include retaliation safeguards

(Gibbs, 2020). Leaders can prioritize whistleblower protections by establishing clear anti-

retaliation policies communicated to all employees; leaders can also investigate any

retaliation claims to ensure adequate protection. Confidential investigations can be used

to ensure that reported cases of financial misconduct are handled confidentially to protect

the whistleblower’s identity (Hoekstra & Talsma, 2021). Hoekstra and Talsma (2021)

advocated for having confidential advisors available to potential whistleblowers, arguing

that advisors can lower the threshold for internal reporting, improve the quality of the

whistleblowing reports, and increase the chance that a report leads to an internal

investigation. Robust whistleblower protections can help employees report financial

misconduct, potentially deterring others from engaging in unethical behavior.

Role of Organizational Culture in Fostering Ethical Behaviors

Organizational culture has an important role in fostering ethical behaviors. The

organizational culture determines what is defined as acceptable behavior and how

employees prioritize ethical considerations in their work (Lee, 2020). Al Halbusi et al.

(2021) examined the role of person-organization fit, ethical climate, and employees’

ethical conduct in a quantitative study using a sample of 295 employees across various

sectors. The results of the study showed a positive relationship between the ethical

behavior of leaders and the ethical conduct of employees in the ethical climate,

suggesting that leadership greatly influences organizational climate and employees’

ethical behavior. The findings also demonstrated that the person-organization fit of the

employees moderated the relationship between ethical climate and conduct. The study’s

findings suggest that employees are more likely to act ethically when they have a strong

organizational fit. Financial industry leaders can promote ethical behaviors by facilitating

a strong and inclusive workplace culture.

Workplace stress and a culture with excessive job demands reduce employees’

capacities to act ethically. Employees who perceive a lack of job control and excessive

job demands can be driven to unethical behavior to meet organizational standards. Chen

and Chen (2023) found that performance pressure positively correlates with pro-

organizational unethical behavior. Elshaer et al. (2022) explored the relationship between

work intensification and job insecurity on employees’ unethical behavior in a study of

970 employees. The authors found that work intensification and job insecurity stimulated

unethical organizational behavior, which led to feelings of guilt, emotional exhaustion,

and customer-oriented citizenship behavior. The findings demonstrate excessive job

demands and workplace stress promote an organizational climate of unethical behavior.

The study’s results suggest that financial organization leaders can deter employees’

unethical behaviors by reducing workplace stress, ensuring job demands are appropriate,

and providing employees with more job control.

Organizational communication can influence employees’ ethical behavior. The

ways that organization leaders communicate about ethics shape employees' perceptions

of acceptable behavior. Men and Sung (2022) found that symmetrical internal

communication plays an important role in defining the organization’s positive character

of agreeableness, enterprise, and competence. In contrast, the authors found that poor

communication had significant negative effects on employee trust, control mutuality,

commitment, and satisfaction. The findings suggest that improving communication styles

can facilitate a positive workplace environment conducive to ethical behavior.

Transition

Section 2 contained a comprehensive literature review on unethical behavior in

financial organizations. The section opened with a description of the study’s conceptual

framework, Kaptein’s (2008) CEV model, and a contrasting theory, Cressey’s (1953)

fraud triangle theory. I explored the constructs of each theory and discussed why the

CEV model is a more appropriate framework for understanding strategies leaders use to

deter unethical behavior in financial corporations. The literature review contained five

themes: challenges with unethical behavior in the financial industry, strategies to deter

unethical behavior in the financial industry, leadership styles, processes, and systems to

deter unethical behavior, and the role of organizational culture in promoting an ethical

climate. The findings presented in the review provide a robust foundation for

understanding the potential strategies identified by the study’s participants. In Section 3, I

discuss the study’s methodology, identifying and justifying the methods I used to recruit

participants and to collect, organize, and analyze the study’s data. I also discuss ethical

considerations and the methods I used to enhance trustworthiness in the study. In Section

4, I present the study’s findings, analyze them within the context of the academic

literature and conceptual framework, and discuss the implications of the findings for

business practice and positive social change.

Section 3: Research Project Methodology

Employee integrity impacts the success of financial institutions. Employee

misconduct has led U.S. financial corporations to incur billions of dollars in fines and

penalties, but many financial crimes go undetected for years and lead to irreparable harm

to customers (Ashton et al., 2021). Identifying novel ways to deter employees’ unethical

behavior in financial corporations is increasingly important for leaders aiming to improve

their firms’ reputations and market share (Cialdini et al., 2021). In Section 3, I describe

the methodology I used to conduct the qualitative pragmatic inquiry. I first discuss

project ethics, the nature of the study, and the population, sampling, and sampling

strategy. I also provide methodological details for collecting, organizing, and analyzing

the data, including methods for enhancing the study’s trustworthiness.

Project Ethics

Business scholars have multifaceted roles in qualitative research studies.

Researchers using the qualitative method develop a deep understanding of a phenomenon

or context by collecting and analyzing rich data through interviews, focus groups,

observations, and documents (Bazen et al., 2021). My role as the researcher in the study

was to recruit and engage with participants, actively discussing strategies to deter

unethical behavior in financial corporations through dialogue. Qualitative researchers

must also uphold ethical standards of human research within a framework of

methodological rigor (Du et al., 2023). I obtained approval for the study from the Walden

University Institutional Review Board (IRB) and upheld the ethical principles of human

research provided by The Belmont Report in my role as the researcher. The IRB approval

number is 02-06-25-1178813.

Transparency is an important component of ethical research. Explaining the

researcher’s relationship to the study topic and participants enhances transparency around

biases and assumptions (Jacobs et al., 2021). I have never been employed by a financial

organization in the United States, and I have no relationship with the financial industry

other than as a consumer. I had no previous interactions with any of the study’s

participants. I chose to recruit participants from New York because of the large number

of financial institutions with headquarters in the state despite being personally located in

a southwestern state. This information indicates that there was no possibility of being in a

subordinate or superior position to the study’s participants.

Researchers should uphold ethical standards pertaining to research with human

subjects. The Belmont Report delineates three principles for ethical research: respect for

persons, beneficence, and justice (National Commission for the Protection of Human

Subjects of Biomedical and Behavioral Research, 1979). Respect for persons involves

treating research participants as autonomous agents and protecting those with diminished

autonomy (Ries & Thomson, 2020). I upheld respect for persons by obtaining informed

consent from the participants and respecting their rights to withdraw from the study.

Beneficence involves minimizing harm to the participants and maximizing the benefit of

the study’s findings for society (Barrios et al., 2022). I minimized harm to the

participants by protecting their confidentiality and following the guidelines from the IRB.

The principle of justice involves equally distributing the benefits and burdens of research

(Pritchard, 2021). I upheld the principle of justice by defining fair inclusion criteria for

participation so that the participants chosen can address the research question rather than

being chosen by convenience.

Informed consent is a critical aspect of ethical research with human participants.

Researchers respect participants’ autonomy by soliciting informed consent before

conducting research (Ries & Thomson, 2020). Informed consent involves providing

potential participants with an informed consent form that details the research activities,

the risks and benefits of participation, and the protections in place to mitigate the

identified risks (Klykken, 2022). I used the informed consent form provided by the IRB

in the study. The consent form describes the risks and benefits of participation and

includes information about protecting the participants’ confidentiality. I upheld the

principle of respect for persons by gaining each participant’s informed consent.

The informed consent form contains information about withdrawing from the

study. Research participants’ autonomy extends to their right to withdraw from studies at

any time for any reason (Ries & Thomson, 2020). The informed consent form explains

that the participants can change their minds about participating in the study. I asked

participants to email me to withdraw from the study. If a participant decided to withdraw,

I destroyed all information gathered from the participant. I protected participants’

autonomy by respecting their right to withdraw.

Researchers have the option of providing an incentive to research participants.

Incentives can show appreciation for participants’ time and expertise but can also attract

imposter participants (Chakraverty, 2022). My recruitment strategy involved using social

media to identify participants, and I had no way of ascertaining whether the individuals

contacting me were leaders in financial organizations in New York. I decided not to

provide an incentive for participation to reduce the possibility of recruiting imposter

participants.

Researchers should ensure that the procedures in place are adequate to protect the

participants. Researchers commonly use pseudonyms to help protect participants’

confidentiality (Lahman et al., 2023). I protected participants’ confidentiality by

assigning them unique pseudonyms. I used the participants’ pseudonyms to save their

audio recordings and transcripts. If a participant disclosed any personally identifiable

information during the interviews, I removed the information from the interview

transcripts. One role of the IRB is to ensure that researchers have a robust plan for

protecting participants’ well-being and confidentiality (Friesen et al., 2023). I submitted

all methods for the protection of the participants to the IRB for review and complied with

their guidance and policies.

I would safely store the research data in a password-protected encrypted cloud

drive for 5 years after I received the CAO’s approval of the study. Researchers typically

need to save data for 5 years for potential future analysis and verification of the findings

to address concerns about research or data integrity (Paul et al., 2021). I would store the

data as files identified by the participants’ pseudonyms in a password-protected

encrypted cloud drive. Five years after I receive CAO approval, I will destroy the data

using commercially-available data destruction software.

Nature of the Project

I chose the qualitative methodology for this research project. Researchers use the

qualitative method when a phenomenon has been explored broadly through quantitative

means, but an understanding of the details within the phenomenon is poorly understood

(Nassaji, 2020). Researchers have extensively studied financial crime and employee

misconduct through quantitative surveys and other forms of quantitative analysis (de Batz

& Kočenda, 2024; Lin et al., 2022; Putra et al., 2022). Qualitative researchers have

explored why employees commit financial crimes (Hashim et al., 2020), but researchers

have not probed business leaders’ perspectives on deterring unethical behavior in-depth.

Quantitative surveys on business strategies are designed based on known strategies in the

literature (Ghauri et al., 2020); qualitative research is required to identify and explore

unknown strategies, which was the goal of this study. I chose the qualitative research

method because it allowed me to explore new strategies for deterring employees’

unethical behavior in financial institutions.

Within the qualitative method, I conducted the study using the pragmatic inquiry

research design. Pragmatic inquiry allows researchers to explore real-world solutions to

complex problems in a structured and methodical way and is best suited to applied

settings, such as education and business (Clarke & Visser, 2019). Unethical behavior is

prevalent in U.S. financial firms, making the phenomenon a real-world problem for

business leaders (Carretta et al., 2024). The pragmatic inquiry design allowed me to

research practical and actionable solutions that could help financial firm leaders deter

unethical behavior. I also considered the case study research design for the study. Case

studies are useful for exploring a phenomenon in-depth within a particular organization

or context (Priya, 2021). I did not choose the case study design because I wanted to

explore leaders’ strategies broadly rather than focusing on strategies specific to one firm.

I chose the pragmatic inquiry design because it best aligned with the study’s purpose.

Population, Sampling, and Participants

Researchers should choose participants with extensive knowledge of the

phenomenon. I chose the target population to ensure the data I collected during the

interviews addressed the study’s purpose and central research questions. The target

population for the study consisted of enterprise leaders in the U.S. financial industry in

New York. I chose New York as the study’s setting because 215 banks and 340 credit

unions have headquarters in New York City (U.S. Federal Reserve, 2024). I defined three

eligibility criteria for the study’s participants. The participants must: (a) hold a leadership

position in a financial corporation, (b) have at least five years of experience managing

teams in the industry, and (c) be directly involved in designing or implementing effective

strategies for deterring unethical employee behavior. I chose the inclusion criteria to

ensure that the participants implemented strategies that effectively deterred unethical

employee behavior in their firms.

I gained access to participants through social media. Researchers commonly use

social media to recruit participants from different geographical locations or participant

groups who are challenging to access, highlighting that these forums increase the

diversity and representativeness of the sample (Chambers et al., 2020). I posted a

participant invitation on two social media platforms: My personal Facebook page and my

professional LinkedIn site (see Appendix A). I asked that my personal and professional

networks distribute the invitation to their respective networks. Social media recruitment

allowed me to gain access to participants with the required characteristics and knowledge

for the study.

I established a working relationship with the potential participants by respecting

their expertise, time, and interest in the study. The credibility of qualitative research relies

on the participants providing open, honest, and insightful answers to the researcher’s

questions (Levitt et al., 2021). Participants who feel disrespected or uncomfortable with a

researcher may not provide open answers to interview questions, reducing the

trustworthiness of the findings (Pool, 2024). I established a favorable working

relationship with potential participants by communicating clearly about the study,

showing the participants respect, and following the ethical standards of research.

I chose the inclusion criteria for participation to ensure the participants’

characteristics align with the overarching purpose of the study. A researcher’s choice of

participants can ensure the success of a project or lead to challenges that prevent its

completion (Negrin et al., 2022). I required the participants to have 5 years of experience

managing teams in financial firms because advancement to leadership roles in finance

requires soft skills, academic knowledge, and technical expertise (see Wang et al., 2023).

Not all financial team leaders are directly involved in constructing policies related to

corporate ethics (Saha et al., 2020). I required that the participants be directly involved in

designing or implementing effective strategies to deter unethical employee behavior to

ensure they could address the study’s research question. I chose the participation

eligibility criteria to ensure the participants’ characteristics align with the purpose of the

study.

I used purposive sampling to identify the participants. Purposive sampling is a

non-probability sampling technique where researchers use predefined inclusion criteria to

identify participants with desired characteristics (Stratton, 2023). Purposive sampling is

appropriate for my study because I required the participants to hold a leadership position

in a financial corporation in New York, have at least 5 years of experience managing

teams in the industry, and be directly involved in designing or implementing effective

strategies for deterring unethical employee behavior. Sampling bias is a documented

limitation of purposive sampling (Andrade, 2021). I mitigated potential sampling bias by

selecting participants from different financial organizations, allowing me to explore

strategies independent of individual corporations’ cultures.

The sample contained at least six participants purposively selected from the target

population. I chose the sample size based on considerations of data saturation, which

occurs when collecting additional data does not result in new ideas or themes (Hennink &

Kaiser, 2022). Guest et al. (2020) conducted an empirical study on sample size and

observed data saturation in 97% of interview-based qualitative studies after conducting

six interviews. I based my choice of sample size on Guest et al.’s findings; I used a

minimum of six participants as a starting point for assessing saturation. I determined if

the data is saturated using code saturation. I considered the data saturated when I could

code one participant’s interview using only the codes I used for previous interviews.

Data Collection Activities

There were two instruments in this qualitative pragmatic inquiry: Myself as the

main instrument for data collection and a semistructured interview protocol. Qualitative

researchers act as human instruments to observe participants and collect data through

participant interactions (Wa-Mbaleka, 2020). In my role as a human instrument, I

collected data from the participants using a semistructured interview protocol found in

Appendix B. Using an interview protocol allows researchers to conduct the interviews

consistently across participants, reducing variation in the interviews and improving the

dependability of the study’s findings (Roberts, 2020). The interview protocol contained

an opening script, the interview questions in a logical order, and a closing script

reminding the participants that I would contact them for member checking after the

interview. I followed the interview protocol, adding prompting questions when necessary

for clarification or to gather additional details.

I conducted the interviews in this study virtually using Zoom. Methodological

scholars consider Zoom a safe and reliable platform for conducting qualitative interviews

(Lobe et al., 2020). Virtual platforms have additional benefits for qualitative interviews,

including accessibility and ease of scheduling (Keen et al., 2022). After a participant

contacted me, I sent them the study’s informed consent form by email (Appendix A).

Participants who decided to enroll in the study provided consent by replying to the email

with the words “I consent.” I scheduled the interviews with each participant at their

desired time and date and emailed them a Zoom link for the interview.

At each participant’s scheduled interview time, I conducted the interview using

the interview protocol (Appendix B) and audio-recorded the session using Zoom’s

recording function. After the interview, I saved the audio recording in a password-

protected encrypted cloud drive using the participant’s pseudonym to name the file. I

transcribed the interviews using Otter.ai, an online transcription service that uses AI.

Otter.ai has a 10-15% word error rate (Seyedi et al., 2023); I compared the audio

recordings line by line with the transcript and corrected any errors that occurred during

transcription.

I enhanced reliability in the study using member checking. During member

checking, researchers ask individual participants to confirm their interpretations of the

participant’s answers to the interview questions (Motulsky, 2021). After each interview, I

created a one-page summary of my interpretations of the participant’s answers and

emailed this document to the participant. I asked the participants to confirm my

interpretations or clarify any points that did not align with their perspectives or beliefs.

Member checking promotes the credibility and dependability of a study’s findings by

engaging the participants in the interpretation process before analyzing the data (Johnson

et al., 2020). Member checking helps ensure that researchers begin analyzing the data

with a correct understanding of the participants’ viewpoints.

Interview Questions

1. What effective strategies do you use to deter unethical employee behavior in

your financial organization?

2. Based on your experience, in what ways, if at all, does your firm's culture

impact employees’ ethical conduct?

3. What leadership strategies do you use to deter unethical behavior in your

organization?

4. I have listed some leadership styles with their characteristics on the Zoom

screen. Which leadership styles do you use to deter unethical behavior?

5. A process is a series of sequential steps or activities to achieve a specific task

or outcome. What processes do you use to help deter unethical behavior in

your financial firm?

6. A system is the people, processes, tools, and technology that work together to

achieve a goal. What systems do you use to help deter unethical behavior in

your organization?

7. What motivation strategies do you use to help encourage ethical behavior?

8. How, if at all, do you stay informed and updated on best practices for

promoting ethical behavior and compliance in the financial sector?

9. In what ways, if at all, do you train employees on your firm’s ethical

standards?

10. What strategies have been the most effective in enforcing your organization’s

ethical standards?

11. Is there anything else you would like to discuss about strategies to deter

employees’ unethical behavior or promote ethical behavior?

Data Organization and Analysis Techniques

I developed a personal data organization system for this study. I saved all files

using the naming system found in Table 1, where SS-P is the pseudonym used to identify

the participant.

Table 1

File Organization System Used in the Study

Data file

Description

File name

Audio recording

from the

participant’s

interview

Audio recording captured

using Zoom’s recording

function

SSP1_Audio.mp4

Raw transcript

Transcript generated by

Otter.ai

SSP1_Transcript_Raw.doc

Corrected transcript

Transcript after line-by-line

correction while comparing to

the audio recording

SSP1_Transcript_Corrected.doc

Member checking

document

Summary of my interpretations

of the participants’ answers

SSP1_MC.doc

I saved the files in a password-protected, encrypted cloud drive using the file naming

system in Table 1. I also kept an electronic research journal where I maintained an audit

trail of the research inquiry. I also wrote reflexive notes before and after all research

activities in my research journal to catalog my assumptions, biases, and preconceived

notions about the participants or the substance of the interviews. I developed my data

organization system to ensure I could quickly and accurately locate all of the research

files generated by the study.

I analyzed the data using thematic analysis. Thematic analysis is a method of

identifying patterns in data by systematically organizing the participants’ ideas into

codes, categories, and larger themes (Braun & Clarke, 2021). I used Braun and Clarke’s

(2006) method to conduct thematic analysis, which contains six steps: Familiarization

with the data, initial coding, searching for themes, refining themes, naming themes, and

developing the final report. The thematic analysis process allowed me to identify patterns

in the data that address the study’s research question.

The first step in thematic analysis is familiarization with the data. Braun and

Clarke (2006) recommended that researchers become familiar with the data by reading

the interview transcripts multiple times. I began the familiarization process when I

corrected the transcript by comparing the transcript produced by Otter.ai line by line with

the audio recording, and when I summarized my interpretations for member checking. I

conducted an additional reading of the transcripts to further familiarize myself with the

broad ideas shared by the participants.

The second step in thematic analysis is coding. Researchers code the data by

assigning words or short phrases to each of the participants’ ideas (Locke et al., 2022).

An important aspect of coding is choosing words or phrases that do not lose the meaning

of the participants’ ideas (Braun & Clarke, 2006). I coded the data using NVivo Version

14, a qualitative data analysis software package. By coding data, I reduced the interview

data to a manageable group of codes.

The third step in thematic analysis is searching for themes. After initial coding,

researchers combine similar codes into secondary codes, which I then grouped into larger

categories representing small-scale patterns in the data (Braun & Clarke, 2006). I grouped

primary codes into secondary codes to remove redundancies and grouped the codes into

logical categories. After categorization, I organized the categories into larger themes.

Themes are large-scale patterns in the data that organize the findings into a coherent

structure (Christou, 2022). I developed themes by organizing the codes and categories

into a logical structure representative of the interviews.

Researchers refine and name the themes before developing the final report. In the

fourth step of thematic analysis, researchers refine themes by creating and reviewing a

thematic map to ensure that the themes capture all trends in the data relevant to the

research question (Braun & Clarke, 2006). I created a thematic map that shows the

connections between the codes, categories, and themes, and I reviewed the map to ensure

that no redundant themes or new themes emerge from the categorization. Once the

themes are refined, researchers name the themes by assigning descriptive names that

encompass the overall structure (Locke et al., 2022). In the fifth step of thematic analysis,

I named the themes using descriptions that reflect the patterns I identified in the data.

The sixth step in thematic analysis is writing the final report. I used the themes

from the interview to organize the findings in the final report. During this step, I

examined organizational documents that addressed corporate policies on ethical

behaviors. Triangulating interview findings with information in organizational

documentation can enhance the robustness of the findings and provide alternative

viewpoints and information unaddressed by the participants (Meydan & Akkaş, 2024).

When writing the final report, I compared the findings from the interviews and document

analysis to the conceptual framework and the themes I identified in the literature.

Comparing new research findings to those in the academic literature allows researchers to

place the study’s findings in the context of existing knowledge (Scheel et al., 2021). I

placed my study’s results within the existing literature by explicitly comparing the

findings to those of other scholars, including studies published since I developed the

literature review. I also used the study’s conceptual framework to interpret the findings,

allowing me to ground the practical applications of the study on a strong theoretical basis.

I would store the raw data securely for 5 years after CAO proposal to ensure I could

revisit the analysis for future publication.

Reliability and Validity

Rigorous research is reliable and valid. Reliability refers to the consistency of a

study and whether the findings are reproducible if the same procedures are followed

(Tuval-Mashiach, 2021). Validity refers to whether the findings accurately represent the

underlying phenomenon (Rose & Johnson, 2020). In qualitative research, reliability and

validity are assessed through trustworthiness, which has four components: Dependability,

credibility, transferability, and confirmability. In this section, I discuss the methods I used

to enhance the trustworthiness of the study’s findings.

Reliability

Researchers promote reliability by ensuring their studies are dependable.

Dependability is the qualitative counterpart of reliability measurements in quantitative

studies, referring to the consistency and repeatability of research findings (Tuval-

Mashiach, 2021). Qualitative researchers can promote dependability by thoroughly

documenting and transparently discussing their methodological choices (Closa, 2021). I

documented the research study in a research log that I updated with detailed information

about my interactions with participants, reflexive thoughts, and my choices on codes,

categories, and themes when I analyzed the data. By thoroughly documenting the

research activities, I promoted the reproducibility of the findings.

Dependability can also be enhanced through triangulation and member checking.

Data triangulation enhances dependability by using multiple data sources to cross-

validate the findings, reducing the risk of bias associated with using a single data source

(Marlina et al., 2025). Consistent information gathered from various sources strengthens

the reliability of a researcher’s conclusions. I triangulated the interview findings by

comparing them to information on deterring unethical behavior in organizational

documents. Member checking can promote dependability by adding additional

confirmation of the researcher’s interpretations of the data (Motulsky, 2021). I member-

checked the findings by creating a summary of my interpretations for each participant,

seeking feedback from the participants before analyzing the data. I used an audit trail,

triangulation, and member checking to promote the dependability of the study’s findings

and the conclusions I derived from the findings.

Validity

Validity in qualitative research addresses whether the study’s findings are

accurate. Validity is addressed in qualitative studies through credibility, transferability,

and confirmability (Rose & Johnson, 2020). The first component, credibility, involves

whether the research findings accurately reflect the experiences and perspectives of the

participants (Johnson et al., 2020). I enhanced the credibility of the study’s findings

through member checking and by using quotations from the interview transcripts to

support my assertions. Member checking enhances credibility by ensuring the

participants agree with the researcher’s interpretations of their experiences (Motulsky,

2021). Using direct quotations from the participants can also enhance credibility by

providing textual evidence supporting a conclusion, allowing researchers reading the

study to draw their own conclusions from the data (Eldh et al., 2020). I included

quotations that provide support for each aspect of the themes. Member checking and

using participant quotations enhanced my ability to present accurate findings congruent

with the participants’ experiences.

The second component of trustworthiness addressing validity is transferability.

Transferability is the extent to which the findings of a study can be applied to different

populations, industries, or organizational contexts (Johnson et al., 2020). Researchers can

promote transferability by describing the phenomenon and participants in sufficient detail

to facilitate comparisons to other contexts (Rose & Johnson, 2020). I promoted the

transferability of the study’s findings by updating the study’s literature review to include

new studies published that provided additional context for my study. I also provided

details about the participants to the extent the IRB allowed. I promoted transferability in

the study by describing the phenomenon and participants in detail.

The third component of trustworthiness, addressing validity, is confirmability.

Confirmability is the extent to which others can corroborate research findings (Rose &

Johnson, 2020). The methods I used to address other aspects of trustworthiness also

promoted confirmability, including member checking, using an audit trail, and

triangulation (Rose & Johnson, 2020). Researcher reflexivity is an additional method for

addressing confirmability (Janis, 2022). Practicing reflexivity allows a researcher to audit

their assumptions, helping to prevent personal biases from clouding the presentation and

interpretation of the findings (Florczak, 2021). I wrote reflexive notes in my research

logbook before and after each research activity to maintain an awareness of my thoughts

and preconceived notions. I promoted confirmability using reflexivity.

Data saturation contributed to the validity of the study’s findings. Achieving data

signals that the thematic findings are convergent across the participants’ experiences,

demonstrating that the observed results are consistent (Guest et al., 2020). I assessed

saturation using Hennink and Kaiser’s (2022) method of code saturation. I ensured the

data reached saturation by continuing to recruit and interview participants until no new

codes were needed to represent the participants’ ideas.

Transition and Summary

Section 3 contained a description of the methodology that I used in this qualitative

pragmatic inquiry. I discussed the ethical considerations, the nature of the study, and the

population, sample, and sampling strategy. The section also contained methodological

details for how I collected, organized, and analyzed the data, including methods for

promoting the reliability and validity of the study’s findings. I present the study’s

findings in Section 4, discuss the implications of the study for business practice and

positive social change, and provide recommendations for future research.

Section 4: Findings and Conclusions

Presentation of the Findings

The purpose of this qualitative pragmatic inquiry study was to identify and

explore effective strategies that some leaders in the U.S. financial industry use to deter

unethical employee behavior. Eight enterprise leaders in the U.S. financial industry in

New York participated in the study. Each of the leaders who participated in the study

held a leadership position in a financial corporation, had a minimum of 5 years of

experience managing teams in their industry, and was directly involved in designing or

implementing effective strategies for deterring unethical employee behavior in their

organization. Each of the participants answered about nine questions on ethical practices

within their organization. The overarching research question was, what effective

strategies do leaders in U.S. financial institutions use to deter unethical employee

behavior?

I collected the data via Zoom audio interviews with the eight participants using

the interview protocol in Appendix B. My data transcription was conducted using

Otter.ai, and I employed thematic analysis to examine the interview responses of each

participant, identifying recurring codes and themes. Four major themes that emerged

from the data analysis included (a) employee training, (b) anonymous reporting system,

analysis, which enabled me to identify four major themes related to the strategies used by

leaders in U.S. financial institutions to deter unethical employee behavior. My findings

revealed that financial organization leaders employed multifaceted approaches, including

comprehensive employee training programs that emphasize ethics through practical

scenarios, anonymous reporting systems to foster secure whistleblowing, routine

compliance audits to reinforce adherence, and the use of advanced technology, such as

machine learning, for proactive compliance monitoring. Additionally, leaders

implemented zero-tolerance policies to strengthen accountability, promoted client-first

practices that aligned with fiduciary obligations, created a supportive environment that

recognizes ethical behaviors, and tied career advancement directly to demonstrated

ethical integrity. Lastly, my findings showed that leadership modeling of ethical behavior

and mentorship programs are crucial in cultivating organizational cultures that inherently

deter unethical employee practices. I reached data saturation for this pragmatic inquiry

study with the eighth participant. In Table 2, I presented the themes from the thematic

analysis and provided their respective references. The participants (SS-P) column

indicated the number of participants who referenced a particular theme during the

interview, and the reference column stated the total number of times all participants

referenced the theme.

Table 2

References of Major Themes

Major themes

Participants (SS-P)

References

Theme 1: Employee Training 8 19

Theme 2: Anonymous Reporting System 8 9

Theme 3: Compliance Audit 6 19

Theme 4: Leadership Models Ethic 8 29

Theme 1: Employee Training

Robust employee training programs have a significant impact on ethical behavior

within financial institutions. All eight participants emphasized the need for training that

moves beyond basic rule memorization toward interactive methods, including realistic

scenarios, ethical stress tests, and case studies facilitated by senior professionals to ensure

relevance and engagement. SS-P4 affirmed the importance of employee training by

saying,

Maintaining a strong ethical culture in my financial organization is essential to

preventing unethical behavior, right? So we achieved this by implementing clear

policies, conducting regular ethics training, and also fostering open

communications so our employees are educated on ethical expectations through

workshops and case studies to ensure that they understand the consequences of

any misconduct.

Maintaining regular employee training confirmed my conceptual framework for this

study, CEV, and also corroborated other recent studies. Kaptein’s (2023) clarity virtue

from the CEV model emphasized the importance of clearly articulated and practical

ethical guidelines. Several recent studies corroborate my findings, notably Treviño and

Nelson (2021), who asserted that interactive and realistic training methods lead to deeper

understanding and ethical sensitivity among employees. Moreover, SS-P3 discussed the

importance of stress testing when he said,

I would say that we're looking into ethical stress testing, like financial stress tests,

but for ethics. I feel like employees should go through high-pressure simulations

to see how they respond to real-life ethical dilemmas. It's one thing to say that

you'll do the right thing, but when you're actually in the moment, it's different. So,

training people for those moments ahead of time can make a huge difference.

SS-P3 suggested that stress testing would prepare employees effectively for high-pressure

ethical decision-making, an innovative practice that was not widely reported in earlier

studies (Onesti, 2023). SS-P7 stated, “Our employees regularly go through ethics

training, where we present real-world case studies to help them recognize and handle

ethical dilemmas. We also have a well-defined code of conduct, so expectations are

crystal clear.” Transparency was one of the virtues of Kaptein’s CEV mode, which

emphasized the critical importance of being open about ethical policies and priorities.

Kaptein (2008) affirmed that organizational leaders could promote an ethical corporate

culture by ensuring that the consequences of actions and decisions are visible and openly

communicated, as stated by SS-P7. Integrating a dynamic training structure aligns

strongly with existing and recent literature and studies, indicating that employees are

prepared to handle complex ethical scenarios proactively. Leading to positive ethical

decision-making in U.S. financial institutions.

Theme 2: Anonymous Reporting System

Providing an anonymous reporting system was another theme that emerged as a

pivotal mechanism in fostering an ethical climate within financial institutions because it

significantly mitigates employees' fear of retaliation when disclosing misconduct, as

echoed by all participants. SS-P1 declared,

We do have a system for reporting unethical behavior that's anonymous to protect

our employees and to protect the company legally. Basically, we want people to

feel comfortable reporting suspicious or unethical behavior without the fear of

retaliation. And from my personal experience, this has helped people feel more

invested in and maintain our ethical standards.

My literature review indicated that the inability of employees to freely discuss and report

unethical business practices in financial institutions will continue to foster an

environment that is conducive for unethical behavior to thrive, which invariably leads to

tarnished reputational and possible financial damages, and the loss of shareholder trust

(Mishra et al., 2021). Some recent studies, however, confirmed the importance of the

discussability virtue from Kaptein’s CEV model. One notable study by Roy et al. (2024)

suggested that discussability in an organization can be promoted when leaders encourage

employees to discuss ethical dilemmas, concerns, and potential misconduct openly.

Leaders can also promote discussability by facilitating an atmosphere of psychological

safety. Trevino and Nelson (2021) affirmed that employees are more likely to report

concerns or seek guidance when they feel safe to discuss ethical issues.

My findings revealed that the effectiveness of an anonymous reporting system is

notably amplified when it is supported by a robust whistleblower protection policy that

aligns with regulatory frameworks, particularly the Sarbanes-Oxley Act. SS-P2

emphasized,

Another key strategy is implementing a secure and anonymous reporting system

that allows employees to report unethical behavior without fear of retaliation.

Encouraging whistle-blowing through confidential channels builds trust and

accountability within the organization.

Holding employees accountable for ethical misconduct is well aligned with my

conceptual framework in Kaptein’s (2008) CEV model of sanctionability. The virtue of

sanctinability, as stated by Kaptein, suggests that an organization should hold employees

accountable by consistently enforcing consequences for unethical behavior and rewarding

ethical behavior among employees.

Integrating anonymous reporting mechanisms with zero-tolerance policies for

ethical violations strongly reinforces organizational accountability. Previous studies have

shown that holding employees and organizations accountable for unethical business

practices is an effective deterrent, as affirmed by Welch (2023). SS-P8 stated, “We've set

up this strong anonymous reporting system, encouraging people to report suspicious

activities. It's also a safe space, so employees feel comfortable speaking up if they notice

something wrong.” The practical enforcement of zero-tolerance policies, combined with

ongoing ethical education and transparent disciplinary measures, has proven effective in

deterring unethical behavior. A recent study by van Steenbergen et al. (2023) noted that

providing an anonymous reporting system that incorporates a whistleblower protection

policy that emphasizes the necessity of clear, enforceable consequences and consistently

applied disciplinary actions will significantly reduce ethical breaches in the U.S. financial

institutions.

Leaders can also incorporate a client-first strategy, which further enhances the

effectiveness of anonymous reporting systems by aligning employees’ incentives and

behaviors closely with fiduciary responsibilities and ethical standards. SS-P2 noted,

We foster a client-first attitude. This is particularly relevant given the fiduciary

rule issued by the Department of Labor, which requires advisors to act in the best

interest of their clients. We incorporate this in our daily operations, shaping our

advisory practices. We maintain regular reviews and audits, so excuse me. Still,

regular interviews and audits ensure that we maintain these ethical standards,

helping to build trust and long-term relationships with our clients.

Participants noted that integrating fiduciary obligations within organizational processes

and reward systems ensures ethical conduct aligns seamlessly with business operations,

fulfilling regulatory requirements such as those set forth by the Department of Labor.

Practicing a client-first strategy supported Kaptein’s (2008) congruency virtue. A

comprehensive approach to anonymous reporting, integrating protective policies, zero-

tolerance enforcement, and a client-focused fiduciary strategy, will create a robust

framework for sustaining ethical integrity and transparency within U.S. financial

institutions.

Theme 3: Compliance Audits

In my literature review, I identified several individual-level factors, including the

desire for personal gain, that can influence employees to engage in unethical practices

within financial institutions. Sometimes the pressure comes because of organizational

policy that ties aggressive and unrealistic employee revenue performance to financial

gains (Kundro et al., 2023). Regular compliance audits emerged as critical tools for

proactively identifying and managing ethical risks within financial institutions. One

participant, SS-P1 disclosed,

We have a regular, rigorous compliance process, including continuous monitoring

and auditing transactions to detect and deter any potential unethical behavior. We

bolster that with technology that regularly flags unusual activities that may set off

alarm bells, and we do our best to align with requirements as required by the Bank

Secrecy Act and previously mentioned anti-money laundering regulations.

Regular compliance audits perform dual functions in an organization. Compliance audits

are both preventive and detective in their functions, aligning closely with Kaptein’s

(2023) sanctionability virtue of the CEV model, which emphasizes systematic

enforcement and clear consequences for unethical behaviors. The integration of advanced

technological solutions, including machine learning-driven analytics, blockchain, and

transaction monitoring systems, substantially enhances the effectiveness and strategic

foresight of compliance audits. My findings extend the body of knowledge by integrating

cutting-edge technology into regular compliance audits. SS-P1 stated,

One area that would be worth discussing is the integration of advanced data

analytics into our compliance systems. What we have been doing is leveraging

machine learning, and what we're trying to do with that is see if we can predict

patterns that may indicate unethical behavior. This is a proactive approach, and

what it does is allow us to address issues before they escalate. So, for instance, it

may expose a pattern of potentially unethical behavior that could lead to a breach,

and what the institution does is address it at that time to ensure compliance with

regulations. And it does, you know, federal regulations do mandate

comprehensive audits and transparency at all times. So, big data and machine

learning give us a leg up.

Several recent studies, including research by Pattyam (2020), described the vital role that

technology plays in enhancing ethical compliance, advocating for proactive rather than

reactive interventions to ethical misconduct. My findings revealed that the effectiveness

of compliance audits is significantly amplified when supported by a workplace

environment that prioritizes employee well-being, flexibility, and stress alleviation

initiatives. SS-P4 described the importance of a supportive environment when he said,

I would say that we focus on creating a supportive environment that rewards

ethical behavior, and you know, this would include offering flexible work options

and well-being programs that acknowledge the pressures of, you know, the

banking sector and help employees manage stress without compromising their

values.

A supportive environment, characterized by Kaptein’s supportability virtue in the CEV

model, helps organizations mitigate stress-related ethical lapses by directly fostering an

organizational culture that values ethical integrity. To complement a supportive

atmosphere, SS-P7 affirmed, “One of our most prominent has been integrating ethics into

performance evaluations. Advisors aren't just measured on their financial results; they're

also evaluated on how they achieve those results.” According to SS-P7, linking ethical

behavior to advancement opportunities and tangible rewards further motivates employees

to adhere to ethical standards. Recent empirical findings by Babri et al. (2021) confirmed

the effectiveness of reward-based structures, demonstrating their role in helping to embed

ethical conduct into the corporate culture. Collectively, the insights gained from the

literature review and from my study revealed that compliance audits, when paired with

advanced technology, supportive workplace structures, and incentive-based ethical

practices, constitute a comprehensive approach to ethical governance, enhancing

accountability and integrity within financial institutions.

Theme 4: Leadership Models Ethics

One of the most effective strategies for deterring unethical employee behavior in

the U.S. financial industry, cited by all the participants in my study, is when leadership

models ethics within the organization. All eight participants referenced and emphasized

the importance of leadership in shaping the culture of ethics within an organization 29

times. Participants consistently emphasized that ethical leadership behaviors have a

significant influence on employee actions and organizational culture, solidifying the

necessity for leaders to consistently embody ethical standards. SS-P5 noted,

Leadership plays a vital role in maintaining ethical standards. Our leaders lead by

example, demonstrating fairness and transparency in their decision-making by

embedding ethical leadership throughout the organization and cultivating a

culture where integrity is valued and unethical behavior is deterred.

The role of leadership in deterring unethical employee practices is strongly supported by

Kaptein’s (2008) congruency virtue of the CEV model, confirming the alignment

between organizational ethics and leadership behavior. A recent study by Al Halbusi et

al. (2021) confirmed the critical role of leadership integrity in shaping ethical climates

within organizations. My study, however, contributes to the discussion about the

leadership role in establishing and shaping ethical standards within an organization by

incorporating diverse leadership styles, including transformational, servant, and

participative leadership, to reinforce ethical norms across varying organizational contexts

effectively.

SS-P5 stated,

I lean towards more of an adaptive leadership style. It's crucial in a startup

environment where regulations, technology, and market conditions are constantly

involved; adaptive leadership allows us to quickly respond agilely, including

updates and regulatory requirements from bodies like the Financial Conduct

Authority. Also, by promoting flexibility and continuous learning within the team,

we ensure that ethical considerations are integrated into all business aspects and

that we adapt to new challenges effectively.

My detailed exploration of adaptive leadership styles also suggests the necessity of

flexible ethical frameworks that evolve in response to changing business environment,

regulatory and market conditions, presenting ethical leadership as dynamic rather than

static.

Business Contributions and Recommendations for Professional Practice

In this qualitative pragmatic inquiry study, I have significantly contributed to

professional business practice by examining the effective strategies that leaders in U.S.

financial institutions use to enhance ethical behavior, mitigate risks, and strengthen

organizational integrity. Unethical behaviors within U.S. financial institutions posed

persistent challenges, frequently resulting in severe financial penalties, regulatory

scrutiny, and reputational damage. By analyzing real-world solutions, my study

effectively bridged theoretical gaps and practical knowledge on ethical management.

Institutional leaders could utilize these findings to develop robust, proactive ethical

frameworks to improve organizational reputation, ensure regulatory compliance, and

enhance overall business performance.

A primary recommendation involved enhancing employee ethical training through

realistic scenario-based simulations and ethical stress testing. Unlike conventional

compliance training that primarily emphasized rule memorization, realistic scenario-

based simulations and ethical stress testing provided employees with practical tools to

address actual ethical dilemmas they encounter in their roles. Leaders, compliance

officers, and human resource professionals were encouraged to integrate the intensive

training sessions into regular curricula, as Kaptein’s (2008) virtues of clarity and

congruency of the CEV model suggested. The realistic scenario-based simulations

initiatives will better equip employees to navigate complex ethical scenarios and foster a

robust ethical culture throughout U.S financial institutions.

Another key finding in my study emphasized the importance of anonymous

reporting systems coupled with whistleblower protections, as stipulated by regulations

such as the Sarbanes-Oxley Act. My analysis revealed that the fear of retaliation often

hinders employees from reporting unethical conduct, perpetuating organizational ethical

misconduct. Establishing a secure, confidential reporting mechanism with clear legal

protections fostered trust and transparency within the organization. Leaders of financial

institutions are advised to prioritize the use of training and anonymous reporting systems,

as identified, and communicate protections explicitly. They should also actively

encourage the use of these systems to identify and deter unethical practices effectively.

Regular compliance audits, supported by advanced analytical technologies such as

machine learning and big data, emerged in my study as a crucial recommendation for

helping leaders deter unethical employee behavior. Advanced technologies enable

predictive monitoring, shifting organizations from reactive compliance toward proactive

ethical oversight. Financial leaders and technology executives are encouraged to invest in

these capabilities and ensure that their compliance teams receive adequate training.

Investing in advanced technologies will enhance early detection of unethical behavior,

mitigating misconduct before substantial damage is done.

Linking ethical behavior directly to employee incentives and performance

evaluations emerged in my study as essential to fostering genuine ethical cultures within

an organization. Traditional reward systems that primarily focused on financial

achievements sometimes inadvertently encourage unethical business practices.

Incorporating ethical conduct metrics into performance reviews and career advancement

criteria incentivized integrity alongside performance. Human resource managers and

senior leadership teams are encouraged to embed ethical conduct metrics into their

evaluation frameworks to solidify long-term ethical commitments within their

organization.

Finally, ethical leadership was identified as central to maintaining organizational

integrity. Leaders who modeled consistent ethical decision-making significantly

influence employee conduct and reinforce a positive organizational culture. My study

emphasized adaptive, transformational, servant, and participative leadership styles that

effectively address evolving ethical and regulatory challenges as critical factors to

establishing an ethical culture within an organization. Senior executives, board members,

and training specialists in financial institutions are encouraged to incorporate various

leadership styles into their training programs. Disseminating the findings of my study via

academic journals, conferences, webinars, social media, and internal training programs

would enhance widespread adoption of effective ethical practices across the U.S.

financial industry.

Implications for Social Change

Ethical misconduct disproportionately affects vulnerable populations, threatening

economic security and personal dignity (Kaptein, 2023). This pragmatic inquiry study has

substantial implications for social change by advancing ethical standards within financial

institutions, thereby improving human dignity, organizational integrity, and community

well-being. Implementing the strategies identified in the study will enable institutions to

shield individuals from economic exploitation, reinforcing fairness and respect in society.

At the individual level, enhanced ethical training and transparent reporting will

empower employees to make informed ethical decisions, thereby increasing their

professional integrity, confidence, and sense of responsibility. Employees who are well-

versed in ethical obligations foster stronger, trust-based interpersonal relationships, which

in turn improve the overall workplace environment and respect individual dignity

(Treviño & Nelson, 2021). Organizations that implement strong ethical governance tend

to experience fewer scandals and regulatory infractions, thereby preserving stakeholder

trust and ensuring long-term sustainability of the organization. Enhancing the ethical

climate of an organization enhances organizational stability and reputation, contributing

to broader economic stability and community trust. Incorporating ethical standards within

organizational norms will encourage broader societal shifts toward transparency and

accountability, thereby increasing consumer confidence in the U.S. financial institutions.

Ethical practices promote economic equity and stability, particularly benefiting

historically disadvantaged groups that have long been affected by unfair financial

practices. Institutions that are committed to ethics ensure equitable access to financial

services, preventing abuses such as predatory lending witnessed in Wells Fargo, as

described in my literature review. By prioritizing transparency and ethical integrity,

institutions support economic resilience and community well-being.

Culturally, strong ethical standards reinforce integrity, fairness, and accountability

as core societal values. Consistent ethical behavior in financial institutions will inspire

broader cultural expectations for responsible conduct across industries, enhancing

societal trust and unity. At the societal level, the study's findings promote systemic

improvements in ethical governance, fostering comprehensive trust, economic fairness,

and stability. Consistent ethical practices in financial institutions will encourage

policymakers and regulators to expand such standards, thereby strengthening governance

and accountability (Kaptein, 2023). Collectively, the enhancements identified in my

study significantly improved societal conditions and support sustainable positive

transformations across all industries.

Recommendations for Further Research

Though I explored effective strategies that some leaders in the U.S. financial

industry use to deter unethical employee behavior, several avenues exist for further

research to enhance the understanding and practice of ethical leadership within financial

institutions. Future studies could address the sample size limitations I identified in my

assumptions and limitations by involving larger, more diverse participant groups from

various financial sectors and geographic locations, thereby enhancing the generalizability

of the findings. Researchers may employ a mixed-methods approach to integrate

quantitative data with qualitative insights, thereby providing more comprehensive and

measurable outcomes.

Another recommendation is to explore the effectiveness of specific technological

tools, such as AI and predictive analytics, in real-time ethical monitoring. Because this

study highlighted the proactive potential of advanced technologies in compliance audits,

further empirical investigation could validate the real-world efficacy of these

technologies and identify their practical limitations. Additionally, future studies might

examine how small and medium-sized financial institutions, which often have fewer

resources for compliance, can effectively implement the technological solutions

identified in this study.

Given that one of the limitations I identified was the potential for participant

response bias due to self-reporting, future research could incorporate observational

methodologies or longitudinal designs. This approach would enable a deeper

understanding of ethical behaviors and leadership dynamics over extended periods,

potentially providing a richer and more accurate representation of actual practices within

organizations. Researchers should consider engaging in independent assessments or third-

party validations to enhance objectivity further and mitigate bias.

Future research could also investigate the role of external regulatory environments

and cultural contexts in shaping organizational ethics in financial institutions. This focus

would directly address the limitation related to the CEV model's primary emphasis on

internal organizational culture, thereby broadening its scope to include external pressures,

market conditions, and regulatory influences. Comparative cross-cultural studies could

offer valuable insights into how diverse regulatory and cultural environments uniquely

affect ethical practices and compliance behaviors within financial institutions.

Finally, future research should prioritize exploring how to effectively disseminate

ethical best practices across organizations, addressing limitations related to social

desirability bias in public documentation. Researchers may study the effectiveness of

various dissemination methods, such as targeted training programs, professional

development workshops, or industry-wide ethics campaigns, to determine which

strategies are most effective in establishing lasting ethical commitments within

organizations.

Conclusion

In this qualitative pragmatic inquiry study, I explored effective strategies that

some leaders in the U.S. financial industry use to deter unethical employee behavior. The

findings from this study established the critical role that ethical leadership plays in

shaping and sustaining organizational integrity within U.S. financial institutions.

Implementing comprehensive, proactive strategies, such as engaging ethical training,

strong anonymous reporting systems, advanced compliance auditing supported by

predictive technologies, the integration of ethical performance metrics into employee

performance evaluations, and strong ethical modeling by leadership, can significantly

reduce unethical behavior and reinforce organizational accountability. The findings

aligned with the virtues outlined in Kaptein’s CEV model, which emphasized clarity,

congruency, and sanctionability as foundational to cultivating a culture of ethics

(Kaptein, 2023). Furthermore, Treviño and Nelson (2021) highlighted that ethical

leadership, when consistently practiced, not only supports compliance but also inspires

employee engagement and long-term organizational loyalty. As financial institutions

incorporate these findings into practice, they will enhance business resilience and

contribute to a more just, transparent, and trustworthy economic system. Ethical

leadership, therefore, must be seen not merely as a regulatory requirement but as a

strategic driver of sustainable success and meaningful social transformation.

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