Ethical stance ‘does not up firms’ value’

ETHICAL trading does not increase a company’s value, according to a new study by Edinburgh University.

The research found investing in ethical schemes, such as those combating corruption and meeting high environmental or human rights standards does not improve a share price – contradicting the widely held view to the contrary.

Experts at the university worked with colleagues in Leeds to track the stock market reaction to firms being added to the FTSE4Good index – a listing in which companies must meet a series of socially responsible criteria.

Hide Ad
Hide Ad

The report studied 356 businesses, added to the FTSE4Good index from July 2001 to March 2008.

Jens Hagendorff, of Edinburgh University Business School, said: “Investors do not take companies’ claims that being socially responsible is in the company’s interest at face value.”