Purpose

This paper aims to examine the effect of the corporate ethical approach on the cost of equity capital. This study is conducted on a large international sample on behalf of the world’s most engaged firms from an ethical point of view in 2015.

Design/methodology/approach

The multivariate linear regression model is used to meet the purpose of this study and research hypotheses are also examined using a sample of 80 of most ethical firms in the world during the year 2015. Moreover, three variables (i.e. business ethics, corporate social responsibility and executive compensation based on the achievement of sustainable development goals) are used to reflect the corporate ethical approach and the implied cost of equity capital is used for estimating the cost of equity. In this regard, equity cost estimation is the most appropriate approach to test the effect of business ethics on the cost of financing firms.

Findings

Based on a sample of 80 firms emerging as the world’s most ethical firms in 2015, the results revealed that firms with better ethics scores are significantly associated with a reduced cost of equity capital. This paper also demonstrates that the executive incentive pays that are based on the objectives of sustainable development are able to explain different outcomes regarding the relation between corporate ethical behaviors and the cost of equity. These findings support arguments in the literature that firms with socially responsible practices have a higher valuation and lower risk.

Originality/value

This study provides implications for global regulators and policymakers when setting social reporting standards, suggesting that corporate ethical engagement reduces the cost of equity capital by decreasing the information asymmetry and thereby reducing the firms’ risk. Therefore, the findings may be informative to international managers and investors when considering the effect of business ethics on the firm’s ex-ante cost of equity. In this perspective, the voluntary disclosure of information makes it possible to mitigate the problems of asymmetry of information and conflict of interest between the firm and its main providers of capital, which could reduce the cost of equity.

中文翻译：

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企业道德行为和股权资本成本：来自世界上最道德的公司的证据

目的

本文旨在检验企业道德方法对股权资本成本的影响。这项研究是在 2015 年代表世界上参与度最高的公司从道德角度对大型国际样本进行的。

设计/方法/方法

多元线性回归模型用于满足本研究的目的，并使用 2015 年全球 80 家最具道德的公司的样本对研究假设进行了检验。此外，三个变量（即商业道德、企业社会责任和基于实现可持续发展目标的高管薪酬）用于反映企业道德方法，并使用股权资本的隐含成本来估计股权成本。在这方面，股权成本估算是检验商业道德对融资公司成本影响的最合适的方法。

发现

根据 2015 年成为世界上最具道德的公司的 80 家公司的样本，结果显示道德得分较高的公司与股权资本成本的降低显着相关。本文还表明，基于可持续发展目标的高管激励薪酬能够解释关于企业道德行为与股权成本之间关系的不同结果。这些发现支持文献中的论点，即具有社会责任实践的公司具有更高的估值和更低的风险。

原创性/价值

本研究为全球监管机构和政策制定者制定社会报告标准提供了启示，表明企业道德参与通过减少信息不对称来降低股权资本成本，从而降低公司风险。因此，在考虑商业道德对公司事前股权成本的影响时，调查结果可能对国际经理人和投资者有用。从这个角度来看，信息的自愿披露可以缓解公司与其主要资本提供者之间的信息不对称和利益冲突问题，从而降低股权成本。