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The Global Financial Crisis and the Values of Professionals in Finance: An Empirical Analysis

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  • André Hoorn

Abstract

The idea that the ethical values of professionals in finance (PIFs) (e.g., stockbrokers and fund managers) have played a role in the global financial crisis (GFC) is widespread. The crisis-of-ethics debate is important, concerning one of the main policy challenges of our times, but is based on popular lore and anecdotes rather than systematic evidence. We analyze the self-enhancement and self-transcendence values of PIFs vis-à-vis the general population and test for patterns of variation that are consistent with the idea of a crisis of values, meaning patterns of variation that would implicate PIFs’ values in the GFC. Employing pre-crisis data allows for an unbiased assessment. Results reveal only minor differences in values between PIFs and the general population, too small to support the idea of a crisis of ethical values by objective standards. Extensive robustness checks confirm these findings, sometimes actually revealing values differences counter to the crisis of ethical values idea. We conclude that the financial system would not have fared better had we had a different breed of PIFs. Rather, situational forces can induce severe disregard for the welfare of others, also in people with ordinary, decent values. Hence, if anything, the GFC shows that the financial services industry has been providing an environment highly conducive to unethical behavior. The practical implication is that fixes to the financial system can only come from improved regulatory design. Copyright Springer Science+Business Media Dordrecht 2015

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  • André Hoorn, 2015. "The Global Financial Crisis and the Values of Professionals in Finance: An Empirical Analysis," Journal of Business Ethics, Springer, vol. 130(2), pages 253-269, August.
    • Handle: RePEc:kap:jbuset:v:130:y:2015:i:2:p:253-269
    DOI: 10.1007/s10551-014-2225-5
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    References listed on IDEAS

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    Cited by:

    1. van Hoorn, Andr, 2016. "How are migrant employees manages? An integrated analysis," Research Report 16001-GEM, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
    2. Ahrens, Steffen & Bosch-Rosa, Ciril, 2022. "Motivated beliefs, social preferences, and limited liability in financial decision-making," Discussion Papers 2022/8, Free University Berlin, School of Business & Economics.
    3. van Hoorn, Andre, 2016. "The Cultural Roots of Human Capital Accumulation," MPRA Paper 80007, University Library of Munich, Germany.
    4. Deter, Max & van Hoorn, André, 2023. "Selection, socialization, and risk preferences in the finance industry: Longitudinal evidence for German finance professionals," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 106(C).
    5. van Hoorn, André, 2018. "The use of identity primes to explain behavioral differences between groups: A methodological note," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 74(C), pages 146-150.
    6. André Hoorn, 2019. "Generational Shifts in Managerial Values and the Coming of a Unified Business Culture: A Cross-National Analysis Using European Social Survey Data," Journal of Business Ethics, Springer, vol. 155(2), pages 547-566, March.
    7. van Hoorn, Andre, 2015. "Organizational Culture in the Financial Sector: Evidence from a Cross-Industry Analysis of Employee Personal Values and Career," MPRA Paper 67222, University Library of Munich, Germany.
    8. Adams, Renée B., 2021. "Trust in finance: Values matter," Journal of the Japanese and International Economies, Elsevier, vol. 60(C).
    9. Max Deter, 2020. "Prosociality and Risk Preferences in the Financial Sector," SOEPpapers on Multidisciplinary Panel Data Research 1075, DIW Berlin, The German Socio-Economic Panel (SOEP).
    10. Dancsik, Bálint, 2020. "Rendszerszintű kockázat rendszerszintű erkölcs nélkül. Kiegészítések a pénzügyi válságok etikai magyarázatához [Systemic risk without systemic ethics. Supplements to the ethical explanation of fina," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(3), pages 225-243.
    11. Øyvind Kvalnes & Salvör Nordal, 2019. "Normalization of Questionable Behavior: An Ethical Root of the Financial Crisis in Iceland," Journal of Business Ethics, Springer, vol. 159(3), pages 761-775, October.
    12. Eva Parga Dans & Pablo Alonso González, 2021. "The Unethical Enterprise of the Past: Lessons from the Collapse of Archaeological Heritage Management in Spain," Journal of Business Ethics, Springer, vol. 172(3), pages 447-461, September.
    13. Limbach, Peter & Rau, P. Raghavendra & Schürmann, Henrik, 2023. "The decline of trust across the U.S. finance industry," Journal of Economic Behavior & Organization, Elsevier, vol. 213(C), pages 324-344.
    14. André Hoorn, 2017. "Organizational Culture in the Financial Sector: Evidence from a Cross-Industry Analysis of Employee Personal Values and Career Success," Journal of Business Ethics, Springer, vol. 146(2), pages 451-467, December.
    15. Ahrens, Steffen & Bosch-Rosa, Ciril, 2023. "Motivated beliefs, social preferences, and limited liability in financial decision-Making," Journal of Banking & Finance, Elsevier, vol. 154(C).

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