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Ethics
by leon on September 4, 2008

Under Section 406 of the sarbanes-Oxley Act, all public companies are required to disclose whether they have adopted a code of ethics for principal executive, financial, and accounting officers. If they don't have an ethics code, they have to explain why they don't.
What then do we make of a recent University of Notre Dame study, Commonality in Codes of Ethics which reveals that many companies are using the same sentences in their codes. Indeed, in a few cases the codes of ethics are identical, as if they were lifted from each other.
For example, 12 per cent of companies share the line: "Theft, carelessness and waste have a direct impact on the company's profitability."
"The evidence we find indicates that not all codes of ethics vary across firms," the researchers write. "There are clearly a small subset of firms that have virtually identical codes of ethics."
These are troubling findings because one would have expected the codes to vary from company to company. This evidence suggests companies are not taking it that seriously. Which suggests that Sarbanes-Oxley has failed to do the job.
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