Measuring the effectiveness of a code of ethics

Abstract

Previous studies have found that an established code of ethics could have an impact on the behaviour of employees. Recent corporate scandals world wide have placed closer focus on the existence of the code of ethics. As a guideline, the King II Report recommends that every company listed on the Johannesburg Stock Exchange (JSE) should have a code of ethics. Legislative developments such as the Sarbanes-Oxley Act in the US require publicly held companies to disclose in their annual report whether they have adopted a code of ethics. This increase in emphasis on codes of ethics also moved the focus of this research from investigating the mere existence of a code of ethics to considering the role that the content of the code plays in its effectiveness in influencing behaviour. Data was obtained from 14 codes of ethics made available by companies listed on the JSE. Those included in the research were both value and compliance based, and were analysed in accordance with guidelines from King II and from previous studies on code content. Page