Business ethics, corporate social responsibility, and firm value in the oil and gas industry

This study investigated the relationship between ethical performance, corporate social responsibility, and firm value in companies in the oil and gas industry. Ethical behavior and social responsibility were conceptualized by a series of social indexes used to carry out empirical observations. The data were collected from a sample of 55 companies drawn from the population of companies in the oil and gas industry and consisting of public documents, including proceedings of government bodies and court records, and newspapers and magazines dated from January 2000 through December 2003. The set of social indexes was analyzed statistically to establish any significant relationship with the firm's value. The results indicated that ethical performance was positively and significantly correlated with firm value, as measured by return on equity in the exploration and production sector of the industry. In addition, diversity was positively and significantly correlated with firm value, as measured by approximate Tobin's Q ratio in the equipment and services sector. The results of the study corroborated the economic importance of managers leading a socially responsible business operation by aggressively pursuing in their companies goals of zero emissions, zero environmental damage incidents, increased diversity in the workplace, and zero incidents of unethical behavior.