Title: Earnings quality in an ethics perspective

Authors: Mauro Romano; Tiziano Onesti

Addresses: Business Economics and Management, Department of Economics, University of Foggia, Italy ' Business Economics and Accounting, Department of Business Economics, University of Rome III, Italy

Abstract: Profitability is the main objective of most firms, but can profit and the type of economic system firms operate in be anchored to a moral purpose that adequately circumscribes the 'ethical' dimension? In other words, is there an 'ethical measure' of profit? Can corporate decision-makers define a dimension of profit that is considered as 'fair' remuneration for all production factors, including business risk, without exceeding the threshold beyond which profit should or could be considered morally inappropriate due to 'belonging' to all stakeholders (and not just to owners)? Can firms find the appropriate self-regulating mechanisms internally to establish an ethical measure of profit, or, as is often the case, does the external environment have to create the obligations and conditions for the recognition of a 'fair' and sustainable measure of corporate profit?

Keywords: business ethics; corporate governance; earnings quality; earnings management; financial reporting; social wealth; moral purpose; fair remuneration; corporate profit; profitability.

DOI: 10.1504/IJBGE.2016.076343

International Journal of Business Governance and Ethics, 2016 Vol.11 No.1, pp.52 - 67

Accepted: 09 Dec 2015
Published online: 04 May 2016 *

Full-text access for editors Access for subscribers Purchase this article Comment on this article