There are many reasons for differences in ethics and morality among leaders. Here we look at a variety of these factors.

Leader moral identity. A set of studies confirmed the idea that a leader’s moral identity has a major influence on his or her level of ethical behavior. A moral identity involves a self-perception organized around a set of moral traits such as honesty, caring, and compassion. The studies in question concluded that leaders set the ethical tone of an organization and are instrumental in encouraging ethical behavior among subordinates, as well as reducing interpersonal conflict.

Greed. Many people seek to maximize personal returns, even at the expense of others. Exceptionally high executive compensation could be interpreted as a sign of greed. Rationalization and implied permission. One reason is rationalization, which leads people to focus on the intent of the action rather than on the action itself. Moral development level. A notable contributor to a leader’s ethics and morality is his or her level of moral development. Some leaders are morally advanced, whereas others are morally challenged—a mental condition that often develops early in life.

Sense of entitlement. In the opinion of several psychiatrists and corporate governance experts, some CEOs lose their sense of reality and feel entitled to whatever they can get away with or steal. Situational influences. Unethical and immoral leadership behavior can also be influenced by the situation, particularly the organizational culture. If leaders at the top of the organization take imprudent risks, other leaders might be prompted to behave similarly.