The Financial Performance of the World's Most Ethical Companies: Advantage in Times of Crisis
48 Pages Posted: 7 Dec 2012
Date Written: September 3, 2012
The financial consequences of embracing ethical conduct in business remain a subject of contention in the literature. We discuss why ethical companies can have advantages over others by exploring three concurrent dimensions: organizational values, stakeholder management, and good reputation. We evaluate the long-term financial performance of the World’s Most Ethical Companies, a list devised by Ethisphere, using appropriate financial measures. We find that a portfolio of the World’s Most Ethical Companies consistently outperforms the market during the analysed period, both in times of market growth and during periods of market decline, suggesting these companies are particularly resilient in times of crises and can represent sound investments.
Keywords: ethical companies, financial performance, bull and bear markets, conditional models, bootstrapping
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