Trust: The critical factor in theory and practice, from banks to cakes

This paper suggests that due to the incidence of leadership behaviours that are detrimental to many organisational stakeholders', more should be done in terms of corporate governance and auditing to address this. For stakeholders (such as pensioners, staff, and creditors) their relationship with organisational leaders is built on implicit trust. Any damage to that trust can have catastrophic repercussions for many stakeholders, be it emotional through stress or financial. Agency Theory provides a rationale for a basis on which trust can be broken. Rebuilding trust can be a herculean task, so it is important to seek ways in which any potential risk to trust can be avoided. Good governance practice is essential in the quest to maintain trust and protect stakeholders. Tighter guidelines for the content of Annual Reports, more insightful information on the skills, background, and behaviours of organisation leaders, and the use of forensic accounting techniques in the preparation of Audit reports will all facilitate maintaining trust and avoiding risks.