The Financial Performance of the World's Most Ethical Companies: Advantage in Times of Crisis

48 Pages Posted: 7 Dec 2012

See all articles by Nelson Areal

Nelson Areal

University of Minho - School of Economics and Management

Ana Carvalho

University of Minho - School of Economics and Management

Date Written: September 3, 2012

Abstract

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

Suggested Citation

Brandão da Costa Areal, Nelson Manuel de Pinho and Carvalho, Ana, The Financial Performance of the World's Most Ethical Companies: Advantage in Times of Crisis (September 3, 2012). Available at SSRN: https://ssrn.com/abstract=2186088 or http://dx.doi.org/10.2139/ssrn.2186088

Nelson Manuel de Pinho Brandão da Costa Areal

University of Minho - School of Economics and Management ( email )

University of Minho
School of Economics and Management
Braga, 4710-057
Portugal
+351 253 601 380 (Fax)

HOME PAGE: http://nelsonareal.net

Ana Carvalho (Contact Author)

University of Minho - School of Economics and Management ( email )

School of Economics and Management
Campus de Gualtar
Braga, 4710-057 B
Portugal

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