Abstract
The focus of this study was to assess the effect of organizational ethical behavior on the financial performance of firms in Ghana. Researchers have expressed concerns about the ethical behavior of firms in Ghana with regards to its effect on financial performance. The findings of this study will add to the literature, from which those in the field of academia can continually refer. The return on assets, as an indicator for the financial performance of firms, was adopted as the dependent variable. Independent variables were good ethical behavior (GEB), corruption reduction (C), and nepotism reduction (N). A cross-sectional survey design was followed for primary data and firms’ financial records were sources of secondary data. Thirty (30) corporate firms registered on the stock market were selected for the study. A multiple regression analysis was conducted and findings presented in Tables and Figures. Results showed that firms’ adherence to ethical principles of conducting business stand the chance of increasing their financial performance up to 45.0, 38.4, and 43.7 % by unit increases in GEB, and decreases in C, and N respectively. All independent variables had positive correlations with the financial performance of firms studied (GEB, 0.349; C, -0.503; N, -0.680). On firms’ financial performance, the ROA of firms, according to findings is positively and strongly correlated to their adherence to ethical business standards. Based on these findings, the study recommends that corporate firms pay more attention to practices that enhance good ethical behavior through the implementation of ethics policies, and reduce or eradicate nepotism to increase their chances of performing better financially. In addition, firms should ensure gender equality and equity, employee training on ethical standards of work, and encouragement of ethical leadership. Keywords : Ethical behavior, Financial Performance, Organization, Listed companies. DOI: 10.7176/EJBM/13-14-10 Publication date: July 31 st 2021
Highlights
According to earlier scholars, the definition of behavior is characterized by the fact that it is a function of both the persons and the environment (Lewin 1951)
Ethics define a way of doing things and this differs from one organization to another depending on organizational culture and type of business
This study explored the effects of organizational ethics on the financial performance of firms in Ghana
Summary
The definition of behavior is characterized by the fact that it is a function of both the persons and the environment (Lewin 1951). Focus on the culture of www.iiste.org the organization enables managers and subordinates to understand the approved standards of behavior which underpin the day-to-day interactions that would enhance productivity within the workplace environment This viewpoint is underscored by Asare-Bediako a Ghanaian Human Resource management and organization development consultant who has stated that: ―Most managers believe that strong organizational culture, closely linked to organizational objectives and goals, can mean the difference between success and failure in today’s business world (Asare-Bediako 2002). Establishing the appropriate framework for organizational culture requires that the elements and principles must go through consultations and a formal approval process to ensure general acceptability and applicability to meet the expected standards of attitudes and conduct required within the organization (Asare-Bediako, 2002)
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