Ethical issues have received growing attention recently, after corporate scandals and during the current economic crisis. Several initiatives have been adopted to restore confidence and trust in businesses, such as ethics codes. In addition, as a result of those scandals and financial frauds,...

A number of authors have proposed that firms can internalize externalities through their shareholders. This paper investigates this proposition, focusing on public bads. Theoretically it is, indeed, possible that shareholders decide that the firm reduces its public bads at the cost of profits,...