EconPapers    
Economics at your fingertips  
 

Social responsibility and corporate reputation: The case of the Arthur Andersen Enron audit failure

Cheryl Linthicum, Austin L. Reitenga and Juan Manuel Sanchez

Journal of Accounting and Public Policy, 2010, vol. 29, issue 2, 160-176

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.

Keywords: Social; responsibility; Corporate; reputation; Audit; failure (search for similar items in EconPapers)
Date: 2010
References: Add references at CitEc
Citations: View citations in EconPapers (19) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0278-4254(09)00089-1
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jappol:v:29:y::i:2:p:160-176

Access Statistics for this article

Journal of Accounting and Public Policy is currently edited by L. A. Gordon

More articles in Journal of Accounting and Public Policy from Elsevier
Bibliographic data for series maintained by Nithya Sathishkumar ().

 
Page updated 2021-03-09
Handle: RePEc:eee:jappol:v:29:y::i:2:p:160-176