Working Paper | HBS Working Paper Series | 2012

Putting Integrity into Finance: A Purely Positive Approach

by Werner Erhard and Michael C. Jensen


We summarize our new positive theory of integrity that has no normative content, and argue that there are large gains from putting integrity into finance—into both the theory and practice of finance. We define integrity as being whole and complete and unbroken. We argue that if finance scholars, teachers and practitioners take this approach to applications in finance there are huge gains to be achieved. We caution the reader that since our intention in this piece is to call attention to aspects of life and aspects of finance that are not commonly discussed, or certainly not discussed in the way we will do so here, you are likely to find it strange and even wrong or irrelevant. It is unlikely to fit your view of what a finance paper should be. And that will be encouraged by the fact that it is impossible to be complete on such a huge topic in one paper. As a young scholar, Michael lived through the days of the revolution in finance in the 1960s and 1970s when the modern approaches to finance were coming into vogue. Consistent with Kuhn's (1996) Structure of Scientific Revolutions, the established profession, and the established journals, systematically rejected such new thinking. But change did occur and we are committed to see such change continue to happen in the finance of today.

Keywords: Finance; Ethics; Theory; Practice; Change;


Erhard, Werner, and Michael C. Jensen. "Putting Integrity into Finance: A Purely Positive Approach." Harvard Business School Working Paper, No. 12-074, April 2012. (NBER Working Paper Series, No. 19986, April 2014.)