A Signaling Theory Approach to Ethical Leadership Behaviors

The study of ethical leadership across disciplines uses an unintegrated mixture of theories, theoretically conflates leader behaviors with follower evaluations, and is plagued by endogeneity bias which prevents causal inferences, limiting the development of theory and practice. To advance ethical leadership with signaling theory as its foundation, the current work presents a mixture of inductive and deductive preregistered studies. Using a constant comparative analysis method, Study 1 involved coding CEO letters to shareholders (n=9,151 sentences), open-ended survey response text (n = 1,265 sentences), and speeches from celebrity leaders (n = 1,732 sentences). Eight verbal ethical leadership behaviors (ELBs) emerged and were associated with discrete emotions (e.g., righteous anger, pride). In Study 2, ELBs were experimentally manipulated to demonstrate that they cause perceptions of ethical leadership (n = 267; Cohen’s d =.27). Study 3 illustrated that ELBs caused a reduction in financial theft (n =434; Cohen’s d = .20). Study 4 showed mixed results in that ELBs caused an improvement in task performance (n = 434; Cohen’s d = .18) but had little effect on extra role behavior (Cohen’s d = .06). Recommendations for theory and practice are discussed.