Advertisement

Journal of Business Ethics

, Volume 17, Issue 13, pp 1509–1516 | Cite as

A Study of The Link Between a Corporation's Financial Performance and Its Commitment to Ethics

  • Curtis C. Verschoor
Article

Abstract

A number of studies have tested the relationship between a corporation's social and ethical performance and its financial performance. In contrast, this is the first study to demonstrate a link between overall financial performance and an emphasis on ethics as an aspect of corporate governance. It identifies the 26.8 percent of the 500 largest U.S. public corporations that, in their annual report to shareholders, commit to ethical behavior toward their stakeholders or emphasize compliance with their code of conduct. The financial performance of these corporations ranks higher than that of those who do not at a significance level of p = < 0.005, using the 1997 Business Week ranking which averages eight publicly-reported measures of historical financial performance. These findings should motivate more corporations to utilize the principles of Social and Ethical Accounting, Auditing and Reporting (SEAAR).

Keywords

Economic Growth Corporate Governance Annual Report Financial Performance Ethical Behavior 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Aupperle, K., A. Carroll and J. Hatfield: 1985, ‘An Empirical Examination of the Relationship Between Corporate Social Responsibility and Profitability’, Academy of Management Journal 28, 446–463.Google Scholar
  2. Aupperle, K. and D. Van Pham: 1989, ‘An Extended Investigation in the Relationship Between Corporate Social Responsibility and Profitability’, Employee Responsibilities and Rights Journal 2, 263–274.Google Scholar
  3. Brown, B. and S. Perry: 1994, ‘Removing the Financial Performance Halo for Fortune's “Most Admired” Companies’, Academy of Management Journal 37, 1346–1359.Google Scholar
  4. Brown, B. and S. Perry: 1995, ‘Halo-Removed Residuals of Fortune’s“Responsibility to the Community and Environment” - A Decade of Data’, Business and Society 34, 199–215.Google Scholar
  5. Cochran, P. and R. Wood: 1984, ‘Corporate Social Responsibility and Corporate Social Performance,’ Academy of Management Journal 27, 42–56.Google Scholar
  6. Coffey, B. and G. Fryxell: 1991, ‘Institutional Ownership of Stock and Dimensions of Corporate Social Performance: An Empirical Examination’, Journal of Business Ethics 10, 437–444.Google Scholar
  7. Griffin, J. and J. Mahon: 1997, ‘The Corporate Social Performance and Corporate Financial Performance Debate: Twenty-Five Years of Incomparable Research’, Business and Society 36, 5–31.Google Scholar
  8. McGuire, J., A. Sundgren and Thomas Schneeweis: 1988, ‘Corporate Social Responsibility and Firm Financial Performance’, Academy of Management Journal 31, 854–872.Google Scholar
  9. Preston, L. and D. O'Bannon: 1997, ‘The Corporate Social-Financial Performance Relationship: A Typology and Analysis’, Business and Society 36, 419–434.Google Scholar
  10. Spencer, B. and G. Taylor: 1987, ‘A Within and Between Analysis of the Relationship Between Corporate Social Responsibility and Financial Performance’, Akron Business and Economic Review 18(1), 7–18.Google Scholar
  11. Waddock, S. and S. Graves: 1994: The Corporate Social Performance-Financial Performance Link. Paper presented at the annual meeting of the Academy of Management, Dallas, TX.Google Scholar
  12. Waddock, S. and S. Graves: 1997, ‘Quality of Management and Quality of Stakeholder Relations: Are They Synonymous?’, Business and Society 36, 250–279.Google Scholar

Copyright information

© Kluwer Academic Publishers 1998

Authors and Affiliations

  • Curtis C. Verschoor

There are no affiliations available

Personalised recommendations