By Greg Botelho
CNN

(CNN) -- A new breed of executives has taken to ridding their firms of unethical practices, unprofitable divisions and outdated strategies to boost their companies' reputations and bottom lines.

Chuck Prince (left) and Edward Breen (right) worked to rebuild their companies after former CEOs compromised Citibank and Tyco International with ethics-related scandals.

High-profile scandals have rattled the business world in recent years, causing public and government outcry as well as fresh self-evaluation among corporations. Many entrenched executives found themselves out of jobs, opening the door for new leaders to retool their companies' structure and culture.

Some new chiefs of embattled organizations have taken steps they hope will remedy previous problems. The leaders of Shell, Citigroup and the New York Stock Exchange, for example, authorized settlements worth billions of dollars to resolve headaches and give their businesses a fresh start.

Still, issues like those that plagued their predecessors and a growing, but still unsettled economy continue to provide challenges in a complex, demanding business climate.

"People in the United States have high expectations of how business should be conducted," said John Boatright, executive director of the Society for Business Ethics. "There is more transparency, and irregularities are revealed more easily now. To some extent, the bar is constantly being raised."

Being head of a major, multinational corporation has become more difficult, said Carnegie Mellon Professor John Hooker. But even given the daunting challenges of reforming huge companies and instilling core values among thousands of employees, an executive can have a profound effect.

"A strong leader can take charge of a large organization," said Hooker. "It comes from the top."

From accounting tricks to flat-out thievery, corporate crises have been around as long as corporations themselves.

"There are always going to be scandals, especially in finance, because so much money is at stake and you are dealing with creative people, who'll find ways to get around the system," said Boatright, a professor at the University of Loyola, Chicago.

Kenneth L. Lay, Enron's former chairman and CEO, resigned on January 23, 2001. When Enron filed for Chapter 11 in 2001 it was the largest bankruptcy protection case in U.S. history.

The former heads of Enron, Adelphia and WorldCom -- Ken Lay, John Rigas and Bernard Ebbers, respectively -- have been a few of the many poster boys for bad business behavior over the past few years. Certain chief executives' questionable and negligent activities have put an intense spotlight on their colleagues and heightened attention paid to business ethics.

Ex-Tyco chief Dennis Kozlowski's extravagant toga party, the shredding of documents by Arthur Andersen employees and dramatic court cases whetted news outlets' collective appetite, thus capturing the public's attention. State attorneys general, led by New York's Elliot Spitzer, have stepped up efforts targeting corporate fraud, among other crimes.

Amid the public protest, Congress and the president acted in summer 2002. The Sarbanes-Oxley reform bill stiffened penalties for guilty chief executives, toughened accounting guidelines, required company leaders to immediately disclose stock sales and protected whistleblowers, among other measures.

The pattern of illicit activity, followed by public outcry and government action, typically comes in cycles, experts note. Today, after the most recent wave of scandals, executives at tarnished companies, particularly, have great incentive to quickly resolve outstanding issues and institute reforms.

Tyco, for example, swept aside remnants of Kozlowski's administration, and, under new chief Ed Breen, sold off several business units, pared down debt and strengthened remaining divisions. The company posted a $454 million fiscal fourth-quarter profit, including a 13 percent jump in revenue.

Chuck Prince took over Citigroup from Sandy Weill after, among other ethics-related setbacks, the firm paid $240 million to settle predatory lending charges. He worked quickly to forge a $2.6 billion settlement with WorldCom investors and to refocus the financial service company's strategy, stressing smaller purchases and more manageable growth.

While its third-quarter profits rose 13 percent to $5.31 billion, new headaches recently have emerged: Japanese regulators kicked a Citigroup private bank out of that country, and the company issued an apology after an August $13 billion bond sale sparked an uproar in Europe.

"When things that cause [our] legacy and history to be tarnished a little bit, it hurts all of us. It hurts me personally," Prince said, according to CNN/Money. "Examples like that are simply not acceptable, and we're taking very strong action."

"Reputation is an important corporate asset," said Boatright, in terms of satisfying not only investors, but also employees and the general public.

The first key to building a strong reputation, and furthermore a brand, is exposure. Bad Boy Worldwide Entertainment Group, for instance, has scored success in numerous markets -- including clothing, music and publishing -- thanks, in part, to the relentless promotional efforts of its founder, Sean "P. Diddy" Combs.

In two decades, beverage maker Red Bull has swelled to capture 70 percent of the energy drink market, with sales in 100 countries. Sporting the catchphrase "Red Bull gives you wings," the company, led by Austrian native Dietrich Mateschitz, employed sassy and sometimes nontraditional marketing to generate buzz. The company sponsored and gave away drink samples at extreme sports, Formula One racing and other events.

But history is rife with examples of once high-flying firms suddenly sullied by indictments or news stories profiling unethical actions.

"Executives say it takes 20 years to build a positive reputation, but you can destroy it in 30 seconds," said Boatright.

Leaders must also guard against their companies developing an insular culture that is disconnected from mainstream values, said Hooker. He cites Enron as an example of a company that created its own world that eventually spiraled out of control.

Boards of directors, shareholders and competitors place strains on executives that could bleed into a corporation's culture and spawn increased criminality, rather than increased profitability as intended, said Boatright.

"And an executive can make the situation worse by demanding ever more unrealistic performances," added Hooker. "The numbers game ... puts people under tremendous pressure, which exacerbates the problem."

Today's strong leaders respect the importance of a company's standing, as well as the need to instill and enforce ethics in the workplace, said Boatright. Building a positive reputation from the inside out, he added, requires fashioning a corporate culture that is consistent with the greater society's standards.

"You can tell your employees not to break the law, but that's not effective if they don't know the law," said Boatright. "It's better to say, sometime, just do the right thing."