We ask whether the corporate law provisions establishing that the conduct of the manager is
subject to review by the investors (monitoring) and that managers are held to an honorable
behavior (moral suasion) can increase trust and trustworthiness in organizations. We
answer this question through a laboratory experiment. We find that moral suasion increases
the investors' trust. Monitoring also increases trust but only when the manager is not aware
of the experimental identity of the monitor. The manager returns more to those investors who …

Trust and trustworthiness in organizations: the role of monitoring and moral suasion … Trust
and trustworthiness in organizations: the role of monitoring and moral suasion …