Ethical finance and governanceThis special issue provides a forum for new research that looks at the nexus of ethics, finance and governance within. Social scientists have devoted considerable attention to linking human behavior to economic and social forces. A shared belief among classical and neoclassical economists, backed by empirical evidence, is that ethics represents a relevant driver of behavior. Adam Smith introduces the concept of empathy in explaining human behavior in The Theory of Moral Sentiments (1759). The Wealth of Nations (1776) expands on this notion, with empathy serving as a corrective device for countering the potential adverse effects of the market mechanism in the allocation of resources. Early neoclassical models carry on the tradition of incorporating ethics as a moderating force to address the potential adverse effects of pure utility or profit maximization behavior ( Jevons, 1871).In a world with increased labor mobility, designing company strategies and policies that are consistent with cultural differences remains a serious challenge (García-Sánchez et al., 2015). Carroll (1999) put forward a positive relationship between ethical behavior and company profits. Moreover, Tella and Weinschelbaum (2008) suggest that a reduction in unethical behavior in a society is associated with enhanced social capital, human capital and monitoring activities. Zingales et al. (2016) argue that integrity is the most important dimension of corporate culture that is related to a firm's financial performance. Interestingly, Zingales et al. (2016) report that a culture of integrity is weaker among publicly traded companies.The ethical behavior of agents in the finance sector has come under increased scrutiny over the past several years. An in-depth examination of the issue of ethical finance and governance is particularly important given the alarming increase both in the frequency and severity of incidents of corporate fraud. The scandals associated with Enron, WorldCom and Lehman Brothers, as well as the Ponzi schemes of Allen Stanford, Bernard Madoff and others have served to undermine the confidence of investors and the public. Remarkably, Dyck et al. (2014) estimate that only one in four committed frauds is detected in the US market, and that about 15 percent of US firms were engaged in corporate fraud over the period 1996-2004. This is particularly troublesome for those who believe that the USA has the highest standards of monitoring and investor protection worldwide. Equally disturbing, they find that the annual cost of fraud among large US corporations is about $380 billion. For markets with weaker regulatory protection than the USA, these results are especially disconcerting.Given the underdeveloped nature of financial markets and the banking systems of many countries (particularly emerging and frontier markets), alternative solutions for financing investments have appeared, including microfinance entities. Some major international banks have joined local microcredit providers to service this nich...