Safety culture in financial trading: an analysis of trading misconduct investigations

Meghan Leaver and Tom W. Reader

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: High-profile failures in financial trading have led to interest in how the culture of the industry produces risky and unethical behaviours amongst traders. Yet, there is no established theoretical framework for studying this: we apply safety culture theory to examine ten recent high-profile trading mishaps investigated by the UK financial regulator. The results show that the dimensions of safety culture (e.g. management commitment to safety, systems and procedures) used to understand organisational accidents in domains such as aviation also explain failures in risk management within financial trading organisations. This counters narratives focusing on traders who are unethical ‘rule breakers’, and emphasise the value of a systemic approach, whereby safety culture theory is used to explain why risky behaviours in financial trading occur. Safety culture therefore provides a conceptual basis for further research on risky and unethical behaviours in financial trading, alongside providing insights for possible intervention.

Keywords: safety culture; failure; risk-taking; financial trading; regulation; culture measurement (search for similar items in EconPapers)
JEL-codes: F3 G3 (search for similar items in EconPapers)
Date: 2017-02-22
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Published in Journal of Business Ethics, 22, February, 2017. ISSN: 0167-4544

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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:69210

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