A Study on Impact of Ethical Business Practices on Corporate Performance and Reporting

Abstract

Growing awareness of business ethics in today s time has attracted my companies to newlineadopt ethical practices for the wellbeing of the business and the society. Companies newlinefollow good corporate governance practices, indulge in corporate social responsibility newlineand undertake sustainable business practices to be more ethical and responsible newlinetowards the stakeholders. newlineWhatever may be the perspective, the motive behind the companies is good ethics newlineleads to good business. To have a better understanding of this concept, this study newlineanalysis the extent of ethical practices followed by the selected Indian companies and newlineempirically tests the relationship between corporate ethical performance and corporate newlinefinancial performance. Various parameters of ethical performance and financial newlineperformance have been identified based on the previous research and statistically newlinetested. For corporate ethical performance, ethical score has been calculated based on newlinethree dimensions of corporate governance, corporate social responsibility and newlinesustainability reporting. Twenty parameters have been identified based on the newlinedisclosures by the companies in their annual reports and websites. For corporate newlinefinancial performance, market valuation ratios, profitability ratios, solvency ratios and newlineefficiency ratios have been calculated. 120 companies have been selected from the list newlineof ET 500, 2012 taking top 15 companies in selected eight sectors. Moreover, as the newlineemployees are the key stakeholders, the ethical perception of employees working at newlinedifferent positions of management is also analyzed to identify the important ethical newlineissues and a statistical analysis has been done to test the difference between the newlineperceptions of employees at different positions. The study found that the selected newlineIndian companies are following and reporting only 50%-60% of the different ethical newlinepractices identified under the study. Refinery sector mostly dominated by public newlineVI newlinesector companies and IT sector dominated by private companies are following hig