Social responsibility and corporate reputation: The case of the Arthur Andersen Enron audit failure
Abstract
We examine the influence of social responsibility ratings on market returns to Arthur Andersen (AA) clients following the Enron audit failure. Chaney and Philipich (2002) found that AA's loss of reputation resulted in negative market returns to AA clients following the Enron audit failure. Proponents of social responsibility argue that social responsibility can improve the reputation of the firm, while detractors argue that social responsibility expenditures are a poor use of shareholder money. If social responsibility sends a signal to investors regarding the reputation/ethics of management, social responsibility could mitigate the negative returns to AA clients following the Enron audit failure. Using a matched sample of AA and non-AA firms, we do not find evidence that social responsibility mitigated the negative returns to AA clients following the Enron audit failure. Our results are inconsistent with claims that social responsibility can burnish a firm's reputation in a time of crisis and with prior research indicating a positive relationship between social responsibility and market value.Download Info
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Bibliographic Info
Article provided by Elsevier in its journal Journal of Accounting and Public Policy.
Volume (Year): 29 (2010)
Issue (Month): 2 (March)
Pages: 160-176
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Web page: http://www.elsevier.com/locate/jaccpubpol
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Keywords: Social responsibility Corporate reputation Audit failure;References
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- Maurício José Serpa Barros de Moura & Rodrigo de Losso da Silveira Bueno & Helena Wagner P. Rocha & Patricia Morilha Muritiba & Sérgio Nunes Muritiba, 2011. "An analysis of factors affecting the ethical conduct of microcredit officers," Brazilian Business Review, Fucape Business School, vol. 8(1), pages 1-26, January.
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