Changes in the Covalence Ethical Quote, Financial Performance and Financial Reporting Quality, Fayez A. Elayan, Jingyu Li, Zhefeng Frank Liu, Sandra Felton, Department of Accounting, Goodman School of Business, Brock University, Canada; Thomas O. Meyer, Southeastern Louisiana University, Hammond, LA, USA, The Journal of Business Ethics, 2014
We examine the equity valuation effect of press releases of upgrades or downgrades reflected in the Covalence Ethical Quote (CEQ), an index ranking the ethical performance of multinational firms. (…) We find first a significant causal relationship between stock market reactions and changes in the CEQ. (…) Collectively, these results suggest that the CEQ conveys information that is useful to investors. (…) We have tried to make the case that the CEQ measure/ proxy is the best measure capturing firm ethical behavior employed to date.
