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Commonality in Codes of Ethics

27 Pages Posted: 27 Aug 2008 Last revised: 14 May 2014

Margaret Forster

University of Notre Dame

Tim Loughran

University of Notre Dame

Bill McDonald

University of Notre Dame - Mendoza College of Business - Department of Finance

Date Written: January 30, 2009

Abstract

We create a database of company codes of ethics from firms listed on the Standard & Poor’s 500 Index and, separately, a sample of small firms. The SEC believes that “ethics codes do, and should, vary from company to company.” Using textual analysis techniques, we measure the extent of commonality across the documents. We find substantial levels of common sentences used by the firms, including a few cases where the codes of ethics are essentially identical. We consider these results in the context of legal statements versus value statements. While legal writing often mandates duplication, we argue that value-based statements should be held to a higher standard of originality. Our evidence is consistent with isomorphic pressures on smaller firms to conform.

Keywords: Code of Ethics, Textual Analysis, Plagiarism, Regulation

Suggested Citation

Forster, Margaret and Loughran, Tim and McDonald, Bill, Commonality in Codes of Ethics (January 30, 2009). Available at SSRN: https://ssrn.com/abstract=1251482 or http://dx.doi.org/10.2139/ssrn.1251482

Margaret Forster

University of Notre Dame ( email )

361 Mendoza College of Business
Notre Dame, IN New South Wales 46556-5646
United States

Tim Loughran (Contact Author)

University of Notre Dame ( email )

Department of Finance
245 Mendoza College of Business
Notre Dame, IN 46556-5646
United States
574-631-8432 (Phone)
574-631-5255 (Fax)

Bill McDonald

University of Notre Dame - Mendoza College of Business - Department of Finance ( email )

P.O. Box 399
Notre Dame, IN 46556-0399
United States

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