A fresh study from the US brings to light an interesting correlation between the use of trust-related terms by companies and their tendency to provide lower quality information in their earnings reports. Employing words like “honesty”, “ethics” and “character” in their reports, these corporations are more likely to attract regulatory scrutiny and shoulder greater audit costs, which typically indicate heightened risk.
In addition to this, the study also delved into other areas including employee relations, diversity and environmental impact. It was observed that companies which frequently touted trust-related language scored poorly in corporate social responsibility. According to the research, the more a company drones on about trust, the more sceptical one should be of it. Hence, the research stressed that the usage of “trust” words stands as a contrary indication of genuine trustworthiness.