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Individual Investors’ Faith in Corporate America’s Ethics Remains Dismally Low According to Rating Research Survey

Bedminster, N.J. (10 January 2003) - Individual investors’ trust in the ethics of Corporate America remains dismally low, according to the Investor Confidence Index conducted by Rating Research LLC, a joint venture between The Ratrix Group and Opinion Research Corporation (NASDAQ: ORCI).

Only one in twenty (5%) investors claim they are “very confident” that, in general, the senior leadership of publicly traded companies engage in ethical business practices. More alarming is that almost one-half (45%) of investors say they are either “not very confident” or “not at all confident” in senior leadership’s ethical business practices, although this number is lower than the high of 56% reached last August.

“This represents scant improvement since we began measuring investor confidence nine months ago,” said Matthew Molé, co-founder of Rating Research. “Despite efforts by the government and many companies to restore investor confidence and somewhat less media attention on corporate scandals, investors appear largely unmoved.”

The Rating Research Investor Confidence Index includes interviews with approximately 500 investors in separate waves in May, June, August, November and December 2002. The most recent survey was conducted December 12 – 15, 2002.

Government Actions, Corporate Solutions Fall Flat for Individual Investors

Actions on the part of both the Federal Government and corporations to limit future financial abuses and boost investor confidence appear to have fallen short according to the survey findings. As one investor noted: “Nothing much has changed since the government investigation. It raised a stink in the press. There has been some change in corporations and brokerage companies…some cosmetic rule changes.”

Specifically, the number of investors who claim the actions taken by the government to address corporate corruption have had no impact on their confidence in investing their own money is three times as large as the number who claim the government’s actions have increased their confidence (62% say “no impact” versus 19% who express “increased confidence”.)

“Investors are still experiencing a sense of malaise and uncertainty about the investment environment in the stock market – a concern that hasn’t yet turned around,” said Stephen A. Greyser, a professor at Harvard Business School and a Rating Research board member. “When many business stories continue to focus on corporate misbehavior, it raises the threshold of confidence that investors must cross. We seem to be in a difficult environment in which investors are disappointed in both business and the response of the government to the issues that undermine investor confidence.”

According to the survey results, efforts by companies to fortify their corporate governance guidelines are either not well understood by investors or deemed minimally effective. While one-fourth of investors (25%) claim stricter guidelines for corporate governance policies and procedures increased their confidence in investing in publicly traded companies, more than one-third (36%) claimed they “didn’t know enough about corporate governance to offer an opinion” and three-in-ten (30%) believed stricter guidelines had no impact.

“Investors realize that improved corporate governance alone does not guarantee ethical behavior,” notes Professor Greyser. “In today’s environment, this issue rests in the hands of CEOs, who are the ultimate custodians of their companies’ reputations, including their ethics. Monitoring, managing and, when necessary, repairing reputation must be a top priority for every CEO who hopes to earn investors’ confidence.”

Investors Voice Interest in Independent Rating

The most recent tracking study also validated investor interest in independent ratings on companies’ ethics. More than one-half of the investors polled (53%) state that having available ratings on the ethical business practices of publicly traded companies will increase their confidence in their own investment decisions. Investors clearly state, however, that the independence, objectivity and integrity — in short, the credibility — of the organization providing the ratings is key.

More information is available on Rating Research LLC’s Investor Confidence Tracking Study and Ethics Reputation Ratings. Visit www.ratingresearch.com or contact Jane Barr.

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More details on the survey and methodology are available.