Open Access Senior Thesis
Bachelor of Arts
© 2011 Kyle L. Shipley
This paper examines the impact of ethics on financial statement usefulness in 120 publicly traded companies. Because ethics are difficult, if not impossible, to quantify, Corporate Social Responsibility ratings are used as a proxy. The potential implications of this study are vast, though the main idea is that investors would be able to make better financial decisions should the hypothesis come to fruition. Contrarily, investors will also be able to avoid potentially bad investments if they can ascertain certain companies that lack ethical values. In this paper, I will discuss several facets of corporate ethics such as creative accounting in addition to delving deeper into what it means for firms to be sustainable. Using data from the Roberts Environmental Center at Claremont McKenna College in conjunction with financial data from Wharton Research Data Services and panel data techniques, I find that only within the food and beverages industry is there a correlation between ethics and financial statement usefulness. This finding lends distinct support for the hypothesis and also begs the question of how corporate ethics vary between industries.
Shipley, Kyle L., "Ethics in Accounting: Sustainability as a Predictor of Financial Statement Usefulness" (2011). CMC Senior Theses. 283.