Academic journal article ABA Banking Journal

The Best Investment

Academic journal article ABA Banking Journal

The Best Investment

Article excerpt

Scott Flowers read with interest a line in this space two months ago. In "The values proposition" we wrote, "It would make a good graduate thesis to attempt to quantify the financial impact of good values to an organization." Twenty-two years ago, Flowers wrote his thesis for the Pacific Coast Banking School on "The link between ethics and financial performance."

Flowers was then with U.S. National Bank of Oregon. He's now EVP and chief banking officer at First United Bank and Trust, Durant, Okla. In an email he wrote, "My thesis ... is indeed the very 'attempt' you refer to. Granted this thesis is 22 years old but the good thing about ethics is they don't really season all that much."

How true that is. People's opinions about ethics may change, but principles of right conduct don't. If you remove a few references to outdated bank names, Flowers' thesis could have been written now.

In the 63-page paper he talks about the negative impact of unethical behavior and the positive impact of the opposite. On the negative side, referring to some of the insider trading scandals of the time, he points to the hefty legal expenses of litigation, and the potential for actual damages. These in turn drain resources from more productive work. Additional government intervention and regulation is another negative he mentions.

Flowers also noted several positive results from ethical conduct. One was attracting and retaining good employees.

The paper sought to demonstrate the correlation between ethics and financial performance. …

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