ETHICAL LEADERSHIP AND ITS ROLE IN PREVENTING FINANCIAL FRAUD

AUTHOR – ADVIKA ADGAONKAR, STUDENT AT AMITY UNIVERSITY MUMBAI

BEST CITATION – ADVIKA ADGAONKAR, ETHICAL LEADERSHIP AND ITS ROLE IN PREVENTING FINANCIAL FRAUD, INDIAN JOURNAL OF LEGAL REVIEW (IJLR), 5 (1) OF 2025, PG. 536-547, APIS – 3920 – 0001 & ISSN – 2583-2344.

Abstract

This study focuses on how ethical leadership is important in preventing financial fraud by employees within an organization. Ethical leadership ensues when leaders and managers consider the needs of customers, employees and society over what is profitable to ensure transparency, fairness, accountability and integrity within an organization. It can increase motivation, reputation, and goodwill, bring in talented employees, and reduce financial losses. It helps in retaining talent and making the organization a safe place to voice opinions which in turn stimulates creativity and ideas.

Growing competition in the market leads to the need to achieve higher financial goals in a short period. This in turn results in employees resorting to fraudulent activities to achieve such high targets. In the long run, it reduces the organization’s image and trust in the eyes of the public. To avoid the downfall of an organization, leaders need to lead by example and build cohesion amongst their internal teams. Leaders who can create an environment that cultivates and highlights ethics at every stage of an employee’s journey in an organization can mitigate or nullify financial fraud and ensure longevity.

Keywords: Ethical Leadership, Transparency, Fairness, Accountability, Integrity, Motivation, Reputation, Goodwill, Longevity and Cohesion.