The rotten apple in the barrel has a bug in it: how the analogy of parasitic infection may shed light on the causes of & solutions to recent financial scandals

Research output: Contribution to ConferencePaper

Abstract

Time and time again, corporate scandals (lately in the banking sector) remind us of the frailty of human standards and values: ethical conduct is unreliable. The authors have personal experience, drawn from consultancy and research, of the troubling ease with which groups of employees can subvert and expose to existential risk otherwise sound organisations. Daily, occasional and actions under stress may each and all demonstrate forms of behaviour at substantial odds from what individuals would tolerate, enable or support. These individuals are not necessarily behaving irrationally, nor motivated solely by personal gain: and yet their actions are greedy. They put at risk the stability of the overall organisation for the promise of an easier (but unregulated, unsafe or unpalatable) workload, reward or task list. In this sense, then, a biological analogy would be of a parasitical infection that drains energy from a host, reducing its ability to remain healthy or, as some real-world parasites do, changing the behaviour of the host such that it is persuaded that unconventional actions are natural, intuitive. The very conditions of work may have a profound influence here: “This dysfunctional perspective is reinforced by contemporary corporate monoculture where employees live in a bubble, log obscene hours, and vacation with their co-workers. As a consequence giant corporations are dogmatically insular with their own warped code of ethics and worldview” (Burnett 2011). This paper will seek to shed light on the mechanisms by which teams in organisations come to undertake behaviours which out at risk the sustainability and security of the whole. Here, then, for example, the socially-responsible aspirations and benchmarks of financial institutions are compromised. Supposed to build long-term shareholder value by taking into strategic account the need for engagement and transparency about the company, how it creates value for its stakeholders, how it manages risk and contributes to society – all of these can be undermined by rogue traders (Cf. Nick Leeson, Enron, Parmalat ,NorthernRock, Madoff, LIBOR, the London Whale, RBS, Co-op, RBS GRG). As an American author helpfully puts it: “parasitic accountants […] have subverted America's entrepreneurial spirit and jeopardized the common good” (Burnett 2011).
Original languageEnglish
Publication statusPublished - 14 Apr 2014
EventBritish Accounting and Finance Association (BAFA) Annual Conference 2014 - London School of Economics
Duration: 14 Apr 2014 → …

Conference

ConferenceBritish Accounting and Finance Association (BAFA) Annual Conference 2014
Period14/04/14 → …

Fingerprint

Apple
Infection
Scandal
Employees
Frailty
Workload
Code of ethics
Reward
Enron
Accountants
Bubble
Stakeholders
Energy
Ethical values
Transparency
Banking sector
Consultancy
Traders
Benchmark
Sustainability

Keywords

  • Corporate risk
  • financial scandals
  • personnel security
  • insider threat
  • ethics
  • corporate governance

Cite this

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title = "The rotten apple in the barrel has a bug in it: how the analogy of parasitic infection may shed light on the causes of & solutions to recent financial scandals",
abstract = "Time and time again, corporate scandals (lately in the banking sector) remind us of the frailty of human standards and values: ethical conduct is unreliable. The authors have personal experience, drawn from consultancy and research, of the troubling ease with which groups of employees can subvert and expose to existential risk otherwise sound organisations. Daily, occasional and actions under stress may each and all demonstrate forms of behaviour at substantial odds from what individuals would tolerate, enable or support. These individuals are not necessarily behaving irrationally, nor motivated solely by personal gain: and yet their actions are greedy. They put at risk the stability of the overall organisation for the promise of an easier (but unregulated, unsafe or unpalatable) workload, reward or task list. In this sense, then, a biological analogy would be of a parasitical infection that drains energy from a host, reducing its ability to remain healthy or, as some real-world parasites do, changing the behaviour of the host such that it is persuaded that unconventional actions are natural, intuitive. The very conditions of work may have a profound influence here: “This dysfunctional perspective is reinforced by contemporary corporate monoculture where employees live in a bubble, log obscene hours, and vacation with their co-workers. As a consequence giant corporations are dogmatically insular with their own warped code of ethics and worldview” (Burnett 2011). This paper will seek to shed light on the mechanisms by which teams in organisations come to undertake behaviours which out at risk the sustainability and security of the whole. Here, then, for example, the socially-responsible aspirations and benchmarks of financial institutions are compromised. Supposed to build long-term shareholder value by taking into strategic account the need for engagement and transparency about the company, how it creates value for its stakeholders, how it manages risk and contributes to society – all of these can be undermined by rogue traders (Cf. Nick Leeson, Enron, Parmalat ,NorthernRock, Madoff, LIBOR, the London Whale, RBS, Co-op, RBS GRG). As an American author helpfully puts it: “parasitic accountants […] have subverted America's entrepreneurial spirit and jeopardized the common good” (Burnett 2011).",
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The rotten apple in the barrel has a bug in it: how the analogy of parasitic infection may shed light on the causes of & solutions to recent financial scandals. / Hills, Mils; Logendran, Girija.

2014. Paper presented at British Accounting and Finance Association (BAFA) Annual Conference 2014, .

Research output: Contribution to ConferencePaper

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AU - Logendran, Girija

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KW - personnel security

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M3 - Paper

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