earticle

영어

Existing literature argues that ethical managers are valuable to firms, and ethics is an important capability of managers and organization. Then, the more the ethical capability of a manager, the more the compensation to the manager. However, we find that the managers with questionable ethics tend to be paid higher. This pattern is more salient for controlling-shareholder executives. This suggests several possibilities. First, ethical managers are less valuable to a firm than loyal ones. Second, ethical managers are less valuable to the subgroups holding the hegemony of organization. Other possibilities are corporate governance issues such as the collusion between wrongdoers and organization, corruption, and generosity. Our results suggest important implications on corporate governance, system risk, organizational corruption, the challenges to law-governed economy and the tradeoff between firm level and society level optimality.