Can ethics be taught? Evidence from securities exams and investment adviser misconduct
Name
SSRN-id3457588.pdf
Description
Accepted version
Size
638.17 KB
Format
Adobe PDF
Checksum (MD5)
79cd70e4ff5c693378815e318dea6648
Author(s)
Kowaleski, Zachary T
Sutherland, Andrew G
Vetter, Felix W
Date Issued
2020
Journal
Journal of Financial Economics
Publisher
Elsevier BV
Version
Author's final manuscript
Abstract
© 2020 Elsevier B.V. We study the consequences of a 2010 change in the investment adviser qualification exam that reallocated coverage from the rules and ethics section to the technical material section. Comparing advisers with the same employer in the same location and year, we find those passing the exam with more rules and ethics coverage are one-fourth less likely to commit misconduct. The exam change appears to affect advisers’ perception of acceptable conduct and not just their awareness of specific rules or selection into the qualification. Those passing the rules and ethics-focused exam are more likely to depart employers experiencing scandals. Such departures also predict future scandals. Our paper offers the first archival evidence on how rules and ethics training affects conduct and labor market activity in the financial sector.
MIT Department
Sloan School of Management
Terms of Use
Creative Commons Attribution-NonCommercial-NoDerivs License
Persistent DSpace Link
DOI of Published Version
https://doi.org/10.1016/J.JFINECO.2020.04.008
