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An authoritarian leader assumes that he or she is right. This might lead him to make decisions based on a broader set of ethics. Employees are less likely to question this leader, fearing reprisal or rebuff. The truth is that an authoritarian leader will often make unethical decisions because they help him maintain his power.
A democratic leader is more likely to make ethical decisions, especially if the people working with him are in favor of more ethical decisions. When more people are involved in the process, there are more chances that ethical dilemmas will be raised and addressed.
The important thing, no matter one's style, is to make sure that you have a strong code of conduct for your organization and lead by example. An ethical leader will have ethical employees. If the leader is not making ethical decisions, employees won't either. They will assume that the leader does not care, or that they are not allowed to follow their morals.
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