Untrustworthy companies love to talk about trust

Don’t trust companies that talk too much about trust.

So says a new US study that examines the use of words such as “character”, “honest” and “ethics” in company reports.

Companies that use trust words give less quality information in earnings reports, the researchers found. They are also more likely to receive inquiries from regulators and pay higher audit fees, often a sign of increased risk.

The researchers also looked at areas such as companies’ employee relations, diversity and environmental impact. Again, use of trust words was associated with lower corporate social responsibility scores. “Trust words are an inverse measure of trust”, the study concludes. Basically, companies that rabbit on about trust are the ones to be wary about.

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