As the need for ethical standards in the current corporate climate rises, ethical leadership has garnered heightened attention. This research examined the influence of ethical leadership on the manifestation of ethical behavior among workers, as mediated by the ethical environment, grounded in social exchange theory and social learning theory. This research examined the moderating role of person-organization fit (P-O fit) concerning ethical atmosphere and employee ethical behavior.

To assess the study hypotheses, two-wave data were gathered from 295 persons presently working throughout diverse Iraqi firms, namely within the industrial, medical, and insurance sectors. Consistent with the predictions, the results from a sample of 295 employees across various Iraqi organizations demonstrated a positive correlation between the ethical behavior of leaders and the ethical conduct of employees within an ethical atmosphere. Furthermore, it was noted that the person-organization (P-O) fit of workers influenced the correlation between ethical atmosphere and employee ethical behavior, demonstrating a stronger association for those with a high P-O fit compared to those with a poor P-O fit.