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Living Up To Your Codes? Corporate Codes Of Ethics And The Cost Of Equity Capital, Hong Kim Duong, Marco Fasan, Giorgio Gotti
Living Up To Your Codes? Corporate Codes Of Ethics And The Cost Of Equity Capital, Hong Kim Duong, Marco Fasan, Giorgio Gotti
School of Accountancy Faculty Publications and Presentations
Purpose
Previous literature provides mixed evidence about the effectiveness of a code of ethics in limiting managerial opportunism. While some studies find that code of ethics is merely window-dressing, others find that they do influence managers' behavior. The present study investigates whether the quality of a code of ethics decreases the cost of equity by limiting managerial opportunism.
Design/methodology/approach
In order to test the hypothesis, the authors perform an empirical analysis on a sample of US companies in the 2004–2012 period. The results are robust to a battery of robustness analyses that the authors performed in order to take care …