Determinants and Consequences of “Tone at the Topâ€
Abstract
This paper aims to provide insights into the meaning, relevance and current academic debate around the concept of “tone at the topâ€. Our paper is motivated by the desire to shed light on the complexities around this term with roots in the accounting field, especially by means of a review including some of the most important theoretical and empirical papers on this topic, and other connected streams of research relevant for our investigation. Tone at the top is analysed from three different, but highly interrelated perspectives in an organizational context – internal controls, ethical values, culture and behaviour. After that, we have looked into whether academic findings find support or contradiction in real case situations, In this respect, the paper follows its lead to an analysis of three relevant case studies in which the “tone†set at the top of the company is thought to have had a great impact on the overall organization. The main conclusion emerging from the paper encompasses the idea that the concept of tone at the top may not be so important in itself -as a theoretical construct – but its great added value and importance come from the practical implications which derive from the way the top propagates within an organization the right tone. Thus, tone at the top becomes one of the most important elements that contribute to a company’s long term success. When the top of the companies portrayed as negative examples in our paper failed to set the “right toneâ€, huge scandals have occurred or even demise of the whole organization.
Keywords: Ethical values, Integrity, Internal controls, Moral reasoning, Organizational behaviour, Tone at the top.
