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Corporate governance and ethical culture: Do boards matter?

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  • Alexandre Di Miceli da Silveira

    (Fundacao Escola de Comercio Alvares Penteado (Fecap))

Abstract

A poor ethical culture has been considered one of the reasons for the emergence of many corporate governance scandals. In this paper, I investigate the link between ethical culture and the composition of the board of directors for a sample of Brazilian companies. My measure of ethical culture is based on a text analysis of around 50,000 employee reviews posted at Glassdoor for over 1,400 terms related to five ethical dimensions: organizational trust, ethical leadership, benevolent orientation, empathy, and speaking out & efficacy. I find partial support for the hypotheses that a higher ratio of independent directors and of women on boards are associated with better ethical culture. My strong results, in turn, refer to a corporate governance feature little discussed in the literature: the percentage of board members appointed by minority shareholders. In this case, all models exhibit a strong negative relationship between the ratio of such directors and ethical culture. To my knowledge, this is the first paper to document a link between ethical culture and corporate governance mechanisms.

Suggested Citation

  • Alexandre Di Miceli da Silveira, 2022. "Corporate governance and ethical culture: Do boards matter?," Review of Managerial Science, Springer, vol. 16(4), pages 1085-1116, May.
    • Handle: RePEc:spr:rvmgts:v:16:y:2022:i:4:d:10.1007_s11846-021-00476-7
    DOI: 10.1007/s11846-021-00476-7
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    References listed on IDEAS

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