The Business Roundtable's “Purpose of a Corporation” letter announced a shift from stockholder primacy to stakeholder primacy. Interestingly, we contend the letter's language employed a technical efficiency emphasis, suggesting a firm's executives chose to make this shift because they believed doing so would improve the firm's financial performance, via improved corporate governance. We examine whether investors actually accepted the technical efficiency arguments at face value, or in contrast believed the announcements were merely a “rational myth,” what management thought (...) investors would want to hear. We employ a 2-day cumulative abnormal return (CAR) event study for 140 publicly-held firms. Overall, we find investor support for the announcement. In addition, we found how returns to firms with prior similar announcements were negative at the time of the announcement. Also, the returns for firms having multiple signatories were positive and significant. (shrink)

This paper investigates the stock market reaction to the announcement that a firm has been included in the UK FTSE4Good index of socially responsible firms. We use the announcement of firm inclusion in the index to estimate the stock market reaction to a firm being classified as socially responsible. This is an important test of whether investors view the undertaking of socially responsible activities by firms as a value increasing or value decreasing initiative by management. We do not find strong (...) evidence in favour of a positive market reaction. However, there is a large cross-sectional variation in the market reaction to this announcement. Investors appear to be reacting to this event and there are a number of firm characteristics that are well-established proxies for CSR that can explain the market reaction. (shrink)

Prior stock repurchase studies have found evidence that the announcement of a repurchase program sends a positive signal to the market. Firms engaging in open-market repurchase programs do not have to report how, when, and if they actually repurchased any shares. Evidence following the stock market crash of 1987 indicates that many firms announcing repurchase plans did not actually repurchase any share and, by their own admission, had no intention of repurchasing shares. Companies announcing plans and not following through are (...) apparently within the letter of the law. However, we argue that companies announcing plans with no intention of repurchasing shares are guilty of either lying or sending false signals. These companies create distrust in the investment community and intentionally mislead the public in violation of the SEC's antifraud provisions. Changes in the reporting procedures concerning repurchase plans are ethically and legally warranted. (shrink)

Extending the work of Davidson and Worrell, we further investigate the stock market''s reaction to announced corporate illegalities. We examine a sample of 535 announcements of corporate crime and obtain an overall insignificant stock market reaction. However, when the sample is divided by type of crime, we find that the stock market reacts significantly to announcements of bribery, tax evasion, and violations of government contracts. We also find a significantly negative reaction to announcements of corporate crime when (...) the company had been previously accused of other illegal activity. For companies accused of crime in the 1970s, 51% of them were accused again in the 1980s. (shrink)

This study investigates whether firms with fraudulent financial reporting time their earnings announcements strategically and finds that fraudulent firms are more likely to disclose their earnings in the after-market hours during their fraud periods to postpone fraud detection. Cross-sectional tests show that firms with lower visibility are more likely to adopt and benefit from this timing strategy. In addition, fraudulent firms are found to time their conference calls strategically and package their earning news with forecasts to flood the market (...) with information and lower the fraud detection rate. Results also show that unethical managers may benefit from insider trading when their firms use a timing strategy to lower the detection rate. This study sheds light on a potential strategy that unethical managers may adopt to camouflage their fraudulent financial reporting. These results are robust to a variety of settings of samples and model specifications. (shrink)

As was announced at the beginning of this volume of Business Ethics: A European Review, the current editor is retiring from the editorship at the end of this year. It gives him great pleasure to announce that he will be succeeded as Editor of the Review by Dr Jane Collier, of the Judge Institute, Cambridge. In this invited article Dr Collier offers some reflections on how she envisages the future of the Review.

This study examines whether the financial markets penalize public corporations for unethical business practices. Using event study methodology, it is found that upon the announcement that a firm is under investigation or has in some way engaged in unethical behavior, a statistically significant negative abnormal (excess) return is found. This suggests that firms are indeed penalized for their unethical actions.

Following SOX, financial restatements increased dramatically. Prior research suggests that how investors respond to restatements, particularly those involving fraud, may mitigate or exacerbate damage suffered. We extend both accounting and management research by examining the joint effects of pre-restatement managerial reputation and the announcement of managerial corrective actions in response to a restatement on nonprofessional investors’ judgments. We find that pre-restatement managerial reputation and the announcement of managerial corrective actions jointly influence investors’ managerial fraud prevention assessments, which mediate their trust (...) in management. These trust perceptions in turn affect investors’ investment and CEO retention judgments. Our results have implications for firms that are concerned with lessening the negative consequences associated with issuing a restatement. (shrink)

Fossil fuel divestment movements have gained momentum since 2011, aimed at ending fossil fuel use and a move toward a cleaner, affordable, and sustainable energy system, for business and society. The present study investigates the direct impact of fossil fuel divestment announcements on stock prices of firms listed on the United States' stock exchanges. Using an event study and guided by the United Nation's sustainable development goals (SDGs), we test the effects of 116 divestments announcements between 2014 (...) and 2019 on 51 publicly traded fossil fuel companies. Our results suggest that there is a negative effect of these announcements on fossil fuel firm stock prices. Also, we find that the type of fossil fuel firm (coal or oil and gas), the type of divestment (partial, coal only, or full), the timing of the announcement, and the size of the divesting investor have some explanatory power in relation to the (cumulative) abnormal returns following the divestment announcements. While the negative impact on stock prices is not surprising, the reaction from the divested firms after such large divestitures is not consistent with what may be expected, given past reactions to divestitures seeking to achieve different social goals. Given the SDGs, it seems clear why investors are divesting themselves from fossil fuel firms, but why has the reaction to the 116 divestments led to very little change in the way these publicly traded fossil fuel firms do business given their direct and growing impacts on society? We conclude the study with some suggestions for future research. (shrink)

We examine whether social capital mitigates managerial opportunism around share repurchase announcements. We find that firms headquartered in high social capital states are associated with: (i) higher repurchase completion rates, and more so in environments where governance is weak and the potential for misleading investors is high, (ii) a smaller likelihood of information manipulation such as revealing bad news before repurchases, and (iii) lower completion rates when shares are less undervalued. By documenting that firms’ external social environments help curb (...) managerial opportunism, our study suggests that the location of headquarters facilitates trustworthiness and affects ethical considerations in corporate announcements. (shrink)

Is reducing large-scale intergroup conflict the business of corporations? Although large corporations can use their power and prominence to reduce intergroup conflict in society, it is unclear to what extent stakeholders support corporate Intergroup Responsibility. Study 1 showed that support for CIR correlates in theoretically meaningful ways with relevant economic, social, and moral attitudes, including fair market ideology, consumer support for corporate social responsibility, social dominance orientation, symbolic racism, and moral foundations. Studies 2 and 3 employed experimental designs to (...) test the hypothesis that business leaders who advocate for intergroup tolerance boost perceptions of corporations and their leaders as moral, just, and fair, which in turn, increases stakeholders’ support for CIR. We found support for this hypothesis across two highly publicized and contentious events related to racial conflict in the U.S.: The White supremacy rally in Charlottesville and the federal government’s announcement about the planned rescinding of the Deferred Action for Childhood Arrivals immigration policy. Specifically, exposing participants to real-world tweets by CEOs who advocated intergroup tolerance following these events increased participants’ support for CIR. This effect was mediated by heightened perceptions of corporations and their leaders as moral, just, and fair. Taken together, these findings enhance our understanding of the factors that shape stakeholders’ reactions to CIR; highlight intergroup conflict as an emerging arena for CSR; and illustrate the power of ethical intergroup leadership. (shrink)

Prior studies suggest that firms headquartered in areas with strong religious social norms have higher ethical standards. In this study, we examine whether the ethical standards associated with local religious norms influence the M&A announcement returns. We document that the M&A announcement returns of acquirer firms increase with the strength of religious social norms in the area surrounding firms’ headquarters. We also document that the relationship is attenuated when acquirer firms have strong corporate social responsibility credentials, is amplified when public (...) trust that firms act in the best interest of stakeholders suffers a negative shock and when the M&A deal has greater economic significance for the acquirer, and manifests predominantly in the lower tail of the distribution of M&A returns. Our findings are consistent with investor assessments of firms’ ethical standards driving the relationship between local religious social norms and M&A announcement returns. We find no evidence for the competing explanation—that investor assessments of firms’ risk preferences drive the documented relationship. (shrink)

We explore how the Sarbanes–Oxley Act of 2002 created pressure for firms to take more visible and costly corrective action following the announcement of an earnings restatement. Building on theory about focusing events, the institutional effects of legislative change, and the agenda-setting role of the media, we propose that Sarbanes–Oxley created reactive normative pressure on firms that announce earnings restatements, increasing the likelihood of CEO replacement in their aftermath. We theorize that Sarbanes–Oxley changed the meaning—and therefore the impact—of media coverage (...) of earnings restatements. Our findings show that firm behavior after Sarbanes–Oxley did change in ways that are consistent with the intent of the legislation: to increase executives’ accountability for the reliability of their firms’ financial statements. Moreover, we show this change is a result both of the direct effect of the legislation on increasing CEO accountability as well as through intensifying the effect of the media spotlight on misconduct. (shrink)

In lieu of an abstract, here is a brief excerpt of the content:Transactions of the Charles S. Peirce Society 42.3 (2006) 459-461 MuseSearchJournalsThis JournalContents[Access article in PDF]Minutes of the Business Meeting Charles Sanders Peirce Society 28 December 2006Following the annual scholarly meeting, with papers by President Vincent Colapietro, "Reflective Acknowledgment and Practical Identity: Kant and Peirce on the Reflexive Stance" and Essay Contest winner Shannon Dea, "'Merely a Veil over the Living Thought': Math and Logic in Peirce's Forgotten Spinoza (...) Review," President Colapietro called the meeting to order shortly after 7 o'clock in Concourse B of the New York Hilton.The minutes of the 2003 and 2004 meetings, published in the Fall, 2004, and Summer 2005 Transactions respectively, were approved.Vincent Colapietro delivered the following report from the President and Executive Committee:André De Tienne's proposal to adopt the address of the Institute for American Thought at IUPUI as the official address of the Peirce Society was accepted.It was agreed that announcements for the Peirce Essay Contest should be placed in the Transactions and in other appropriate publications (e.g. The Journal of Speculative Philosophy and the S.A.A.P. newsletter) by mid-year if possible. It was also agreed that some length limits should be set for submitted essays and that there should be a requirement that essays meet the general standard of a submission for publication in a journal.There was discussion of the desirability of separating the collection of membership dues from subscription to the Transactions. The chief reasons for thinking that this separation might be called for are 1) the increasing availability of the Transactions through university library electronic subscriptions and 2) the higher cost of foreign subscriptions (making membership in the Society far most costly for foreign members). It was decided to revisit this issue in a year or two (after the new arrangement with IU Press has become more settled).Vincent Colapietro, Mark Migotti, and Nathan Houser were appointed to serve as a "meta" committee to form, with the approval of the Executive Committee, a "regular" committee to organize the 2014 Peirce World Congress. They will also recommend a chair for the committee and a location for the congress. Indianapolis was favored by members present.It was agreed that a list of rules and procedures for conducting Society business should be drawn up for the guidance of new Society office holders. These lists will include the rules and procedures for fulfilling the functions of the various offices, for running meetings, time-tables for making decisions, and so on. N. Houser will work on this with André Tienne and Mark Migotti to draft these lists. [End Page 459]It was agreed that the outgoing Chair of the Nominating Committee should communicate with the incoming Chair a list of the candidates who were considered but not nominated, along with the basis for consideration.Peter Hare delivered the following report on the Transactions:Starting with the fall issue, the Transactions is being published by Indiana University Press. Editorial arrangements are unchanged. Although the transition has been time-consuming in the short run, the new publishing arrangements promise in the long run to increase greatly the journal's impact on the world of scholarship. This year has also been difficult because a key staff member in our previous publishing arrangements failed us. In 2005 we had 499 member/subscribers (406 domestic and 93 foreign). The bank balance is $4008.Vincent Colapietro delivered for Mark Migotti a preliminary version of the following financial report :2005 income was $1,713.05 ($1,497 in membership dues and $216.05 in interest). 2005 expenditures were c. $1,987.40: ($500 for the essay contest prize, $550 for travel subvention and dinner for the contest winner; 674.40 for mailings; $128.40 for web-site fees; $75 dues to the Logic and Methodology section of the International Society for the Philosophy of Science, and $60.00 for a subsidized membership for CISPEC).As of December 31, 2005, the Society's assets were: $10,625.92, a decrease of $.274... (shrink)

While a substantial amount of the literature describes corporate benefits of corporate social responsibility (CSR) initiatives, the literature is silent concerning why some companies announce CSR initiatives, yet fail to implement them. The article examines company delistings from the UN Global Compact. Delistings are surprising because the CSR agenda is seen as having won the battle of ideas. The analysis proceeds in two parts. I first analyze firm-level characteristics focusing on geography while controlling for sector and size; I find that (...) geography is a significant factor while small firms are more likely to be delisted than large firms and some sector characteristics determine delistings. Next, I proceed to uncover country-level characteristics including the degree of international economic interdependence as well as the quality of governance institutions. Multivariate regression analysis shows that companies are less likely to be delisted from countries where domestic governance institutions are well-functioning. To a lesser extent, I find that firms from countries with international economies are more willing to comply with the UN Global Compact requirements. Countries with a high share of outward FDI/capita have a lower share of delisted firms as do countries that are internationally competitive. (shrink)

In early 2011, news emerged that United States authorities had begun to apply injections of pentobarbital, a substance provided by Danish pharmaceutical company Lundbeck, when executing capital punishments. Lundbeck reported to be appalled by such unintended usage of pentobarbital, which is licensed for treatment of refractory forms of epilepsy and for usage as an anaesthetic.The human rights NGOs Reprieve and Amnesty International urged Lundbeck to ensure that pentobarbital was not made available to U.S. authorities for use in capital punishments. Lundbeck (...) argued that complete halting of provision of pentobarbital would be detrimental to patients suffering from conditions of severe epilepsy for whom the substance was developed and intended for treatment for life-threatening epileptic seizures. Lundbeck’s Danish headquarters also argued that controlling the provision of pentobarbital was out of Danish Lundbeck’s hands because the substance is produced at Lundbeck’s plant in the United States. Eventually, after talks with Amnesty International and Reprieve, Lundbeck in July 2011 announced that it would seek to put a stop to using pentobarbital in capital punishment through the introduction of a “drop-ship” program. (shrink)

The aim of the Directive 2005/29 on unfair commercial practices is to contribute to the proper functioning of the internal market and achieve a high level of consumer protection by way of approximation of the laws, regulations and administrative provisions of Member States relating to the elimination of these practices. As announced to the European Commission’s Green Paper, the Commission felt that the existing regulations in the Member States in that the regard to show significant differences causes legal uncertainty and (...) barriers to the operation of the internal market, including building consumer confidence in cross-border transactions. The advantage of the full unification of the law is to strengthen the autonomy of Community law, the achievement of effectiveness. It is questionable whether it is due to the subject matter which is the maximum harmonization discussed act will actually serve to protect economic interests of the consumer. In particular, it undermines the treaty-legal basis, which clearly is aimed at strengthening the single market. Also changes in the Lisbon Treaty, particularly Article 3 TEU, are aimed at establishing the internal market. In the last judgments, like on 9 November 2010 we find that Directive 2005/29 must be interpreted as precluding a national provision, which lays down a general prohibition on sales with bonuses and is not only designed to protect consumers but also pursues other objectives. Does the new act in consequence of the implementation of the national member states give great scope for the flexible operation and may become an effective instrument of pressure to improve business practices? (shrink)

This article explores verbal and visual language use in Zimbabwean contraceptive promotional brochures distributed from the early to mid-1980s. Drawing on recent work in critical discourse analysis of text and visual design, the article uses multimodal discourse analysis and draws from Halliday’s Systemic Functional Grammar’s transitivity analysis to analyze family planning pamphlets, focusing on the discursive construction of women as contraceptive users. The article argues that the salience of the language of risk and vulnerability, which is textually and visually deployed (...) throughout the pamphlets, discursively constructs risk as a feature of unequal power relations. The article further argues that underlying the overarching discourse on risk are multiple ‘silences’ that discursively construct an ideological difference consisting of oppositional binaries between ‘us’ and ‘them’ in terms of power relations. The differentiation of social groups reflects ‘hidden’ social inequalities in the text and visual images. (shrink)

Abstract:AbstractDrawing from qualitative data in a Southern African context, this article explores meanings assigned to names for female genitalia to establish whether males and females assign the same meanings to the same vocabulary used in naming or whether they associate the same vocabulary with different meanings. The study illustrates that while males associate the meanings of terms for female genitalia with well-established, stigmatized views of women, female informants associate the same terms with different meanings that provide alternative views about women (...) and, at the same time, appear to be a form of reclamation of Southern African women’s personhood, identity, and agency. Although males, through these vocabulary items, metaphorically associate female genitalia with possession, which discursively constructs women as powerless objects that can be owned and commoditized, females draw from the philosophy of Africana womanism, indicating that even in asymmetrically structured societies, some women subjectively and purposefully construct their own identities as strong, smart, socially conscious, and independent. (shrink)

Recruiting nurses from other countries is a long-standing practice. In recent years many countries in the developed world have more frequently recruited nurses from the developing world, causing an imbalance in the health services in often already impoverished countries. Despite guidelines and promises by developed countries that the practice should cease, it has largely failed to do so. A consortium of authors from countries that have experienced significant nurse poaching consider the ethical aspects behind this continuing practice.

Smartphones with Global Positioning System (GPS) apps offer simple and accurate tools to collect data on human mobility. However, their associated ethical challenges remain to be assessed. We used the Emanuel framework to assess the ethical concerns of using smartphone GPS to record mobility patterns of young adults in rural South Africa for a larger study on mobility and HIV risk (Sesikhona). We conducted four focus groups (FGDs) with individuals eligible for the Sesikhona study. FGD data were coded using the (...) Emanuel framework. Participants perceived use of smartphone GPS to study human mobility and HIV risk as valuable. They raised concerns about invasion of privacy and confidentiality. Also mentioned were risk/benefit ratio, informed consent and ongoing respect. Concerns expressed provided a useful evidence-base for the development of a guide to inform future participants about ethical issues arising in the use of GPS technology to track mobility and health-related issues. (shrink)

The new business opportunities and prospects emerging in Europe within the Common Market and other Western and European countries also raise important ethical challenges. This work comprises a collection of ethical insights to enhance the conduct of business in an evolving Europe.