This website uses cookies to ensure you have the best experience. Learn more

Lucifer Effect And Corporate Governance Essay

1831 words - 8 pages

Module: Risk Management and Assurance ACCT 627
The Lucifer effect describes Philip Zimbardo’s experiment in 1971 in which college students
under took the roles of guards and prisoners in a study that was originally intended to examine
how prisoners would adapt to prison life. However, the study took on a different focus as the
behaviour of the guards (and authoritative figures) become a key point of interest.
Before the study commenced, participants were dutifully screened for abnormal psychological
traits and were randomly assigned the roles of prisoners and guards. The experiment was to be
conducted over two weeks with Zimbardo himself dual hatting as a prison ...view middle of the document...

(Investopedia, n.d). In another
definition, “(Corporate) Governance is a set of activities to direct and control an organisation
to achieve its objectives by i) providing strategic direction, ii) ascertaining risks are managed
appropriately and iii) verifying that the organisation’s resources are used responsibly.”

The activities of “directing” and “controlling” are supported by the pillars of i) structure, ii)
processes and iii) people. Structure pertains to issues like board composition, how the audit,
remuneration and risk sub-committees are constructed. It also includes issues like
organisational hierarchies, reporting lines and company-wide policies.
Processes describe the activities that the board undertakes through itself and its sub-committees
to mitigate risks and achieve the company’s objectives. Processes essentially are activities
executed to fulfil the objectives of policies. Examples of critical processes include approving
the company’s universe of risk and annual budgets as well as monitoring of managerial
The pillar of people describe the size of the board, the composition of board members (e.g
percentage of female director, independent vs non-independent), their respective competencies
and appointments. It also encompasses attitude, aptitude, values, ethics and culture.
Relevance and implications of the Lucifer effect
Zimbardo’s experiments, similar to Milgram’s experiments, demonstrated that when
individuals are placed in powerful roles, moral integrity and conscience can give way to
corrupting demands. (Cruz-Cruz & Frey, n.d). Both experiments show how the environments
of the company (ethical, organisational, economic) in one way or another, creates its own moral
ecology that constrains one’s ability to act according to his own standards. This happens as a
result of situational forces, group dynamics and daily interpersonal interactions. Interestingly,
this goes against what majority would believe that people do bad things simply because it is
inherent in their nature, what Zimbardo describes as “bad apples”. “The Lucifer effect shows
how easy it is to create situations and systems in which people are driven to do bad things by
the nature of what’s around them.” (Cruz-Cruz & Frey, n.d)
The important revelation here is that Zimbardo asserts that instead of taking the common
perspective of “bad apples” or “bad barrel”1, efforts should be focused on examining the system
in which the situation occurred, what he terms as “bad barrel makers”. Citing examples of
genocides like the holocaust and the abuse that took place in Abu Ghraib prison, he finds it
hard to accept that all the people involved were already “bad apples” themselves. Drawing
common points between the prior experiment and the historical events listed earlier, Zimbardo
1 Refers to the approach of establishing the cause of behavior by analyzing the situation the person is in.

identifies that the individuals in...

Other Papers Like Lucifer Effect And Corporate Governance

Mgt311 Final Guide Essay

850 words - 4 pages Legality and Ethicality of Corporate Governance ETH/376 Legality and Ethicality of Corporate Governance United Thermostatic Controls, a publicly owned company, like many other companies in the world faced financial difficulties in 2010. The company set sales goals in the different regions they serve for 2010; most of the regions met or exceeded their goals although one region was below the target. The director, Frank Campbell, of the

Issues In Corporate Govarnance In Bangladesh

4439 words - 18 pages Introduction Good corporate governance (GCG) in a corporate set up leads to maximize the value of the shareholders legally, ethically and on a sustainable basis, while ensuring equity and transparency to every stakeholder - the company's customers, employees, investors, vendors-partners, the government of the land and the community (Murthy, 2006). GCG is a must for ensuring the required values to different stakeholder groups. It enhances the

Cigna-Corporate Social Responsibility

964 words - 4 pages community as well as support their employees who want to do the same. “Corporations have long been criticized for their negative effect on the natural environment in terms of wasting natural resources and contributing to environmental problems such as pollution and global warming” (Corporate Social Responsibility, 2009). Addressing environmental concerns in a CSR report shows the community that a company is aware of their affects on the

Corporate Goverance

9157 words - 37 pages /control provides positive benefits to the family business and its shareholders. Family-owned firms face unique challenges. However, many failures of family-owned companies indicate that such firms also face a multitude of challenges which risk destroying shareholder value or even the business itself. Corporate governance measures lead to long-term success and keep peace in the family. Corporate governance measures at the family and business

Case Study

1088 words - 5 pages two. Which type of earnings management was practised at Computer Associates? Academic support should be provided (see the attached reference list) from at least two articles. (25 marks) CORPORATE GOVERNANCE 3. Corporate governance is defined as the system by which companies are directed and controlled" (Cadbury Committee, 1992). Discuss the role of specific corporate governance mechanisms that may have alleviated earnings management at

Eth 376

2303 words - 10 pages | 12 | ------------------------------------------------- ------------------------------------------------- Week Three: Corporate Governance | | Details | Due | Points | Objectives | 2 3.6 Determine the legality of corporate governance activities. 3.7 Evaluate the ethicality of corporate governance activities. | | | Readings | Read Ch. 3 of Ethical Obligations and Decision Making in Accounting

The Sarbanes-Oxley Act 2002

958 words - 4 pages Student Imed Baghdadi Business Economics GM 545 Professor: Ramiro Serrano Question #15 Chapter 7 the Sarbanes-Oxley Act of 2002 One of the primary aims of the Sarbanes-Oxley Act of 2002, the New York Stock Exchange, and the NASDAQ corporate governance proposals is to improve the reporting systems for publicly traded companies. Many of the exchange proposals redefine the composition and duties of firms' boards of directors and their


518 words - 3 pages Officer (CFO), Corporate Controller, and the employees of the finance organization uphold important and prominent roles in corporate governance that ensure the company’s financials are balanced, protected, and preserved. The Corporate Policies and Guidelines are said to have been over the course of Microsoft's history, the Board of Directors has developed corporate governance policies and practices to help it fulfill its responsibilities to


290 words - 2 pages references or conduct other background checks on the new employees. The Company also has a hotline for confidential reporting of unethical behavior that is staffed by the corporate controller. The audit committee reviews summaries of all incidents and investigations performed. Required: a. List and briefly explain the strengths of the corporate governance mechanisms at Randall. b. Identify the weaknesses in Randall’s system of corporate governance and provide suggestions for improvement in the system. Organize your answer as follows:

Corperate Governance Failure At Satyam

813 words - 4 pages 1. Strategy, Governance Concepts and Business Terminology: |1. Business continuity |7. Ownership structure | |2. Balance sheet |8. Acquisition | |3. Capital funds |9. Operating margins | |4. Corporate


534 words - 3 pages Architecture * IT Infrastructure schemes * IT Business Applications The relationship between IT execution and IT governance are several: First is the strategy mission and business critical affects adjusted with Business Strategy assessed from the customer’s view. Second is the direct effect of day-to-day actions and fuller processes driven by the trusted outcomes. Third is the Results Key facilitators evaluated through the company’s share

Related Essays

Corporate Governance Essay

2594 words - 11 pages . While Burberry classifies their risk as materiality based on financial and non-financial audit committee. The impact of corporate governance on board accountability, effectiveness and board diversity Keay et al, terms accountability as a shareholder perspective or an Anglo-Saxon (UK corporate governance, Burberry) view although it has an effect on the stakeholder perspective, it acts on rationale in solving agency problems and legitimacy in

Corporate Governance Essay

4476 words - 18 pages Corporate governance: Ireland must learn the lessons of recent corporate governance failures in Ireland and Irish-listed companies must meet evolving international market expectations if they are to attract international investment, the Chief Executive of the Irish Stock Exchange, Deirdre Somers has said. Somers (pictured) made her comments at a special conference on corporate governance hosted by the Irish Stock Exchange in Dublin today

Volkswagan In America Managing It Priorities

596 words - 3 pages budget CORPORATE GOVERNANCE ISSUES * Poor governance of internal structures, internal operations and lack of communication or reporting services lead to lack of upward communication. Recommendations: Dr.matulovic should have made strong corporate governance by assigning tasks to BPTO and ELT member to prepare weekly status report of ongoing projects of their respective business unit. This would have warned about the insufficient fund for SAP

Project Governance Essay

1193 words - 5 pages Hobbs 2005; Pryke 2005 ). In this way, an organisation will have a structured approach to conducting both its business as usual activities and its business change or project and at the same time aligns stakeholders, improves corporate performance and reduces surprises at Board level and for stakeholders. References: 1. GARLAND, R., 2009. Project Governance – A practical guide to effective project decision making. Philadelphia: Kogan Page