Do Ethics Pay?A Study of Indian Companies

Ethical corporate identity has become an important aspect of the global nature of the business. Ethical business behaviour is a way to a better world and may ultimately improve profits. This study establishes a link between different dimensions of ethical corporate identity and financial performance of the company in Indian context. Corporate governance, corporate social responsibility, and sustainability reporting are taken as indicators of business ethics. It was found that ethics and financial performance are significantly and positively correlated, however, only sustainability reporting has a significant impact on marketing ratios of Tobin Q, price to book value, accounting ratios of return on sales, return on capital employed, and return on equity for selected Indian companies. Corporate ethics policy should sensitise moral and ethical behaviour of business leaders.