IDEAS home Printed from https://ideas.repec.org/a/kap/jbuset/v73y2007i2p161-176.html
   My bibliography  Save this article

Keeping Public Institutions Invested in Tobacco

Author

Listed:
  • Nathaniel Wander
  • Ruth Malone

Abstract

Increasingly through the 1990s, tobacco control advocates questioned the practice of public institutions investing in tobacco company stocks. The questioning was framed in at least three ways. First, is it ethical to fund public expenditures with profits from a product that causes addiction and disease? Second, is it sound social policy to derive public income from a product that increases healthcare costs and reduces worker productivity? Finally, is it sound fiscal policy to invest in an historically profitable industry facing multiplying legal and regulatory challenges? While the tobacco industry preferred to restrict discussion to the fiscal question, and offered an affirmative answer, its position was weakened by depressed stock prices brought on by actions of the industry as much as by tobacco control activism. As part of a campaign to restore its credibility as an investment vehicle with public fund managers, Philip Morris (PM) commissioned a report from the influential investment managers/advisors Wilshire Associates. However, Wilshire had only recently conducted such a study for the Washington State Investment Board (WSIB), assuring the board that the value tobacco stocks added to an investment portfolio – if any – was too small to be measured. Nonetheless, within a year, Wilshire produced a report for PM which appeared to laud the investment value of tobacco and to dismiss tobacco-excluded investment alternatives. This paper examines how Wilshire produced apparently diametrically opposed reports for clients with different interests. It reveals a pattern of potential conflicts of interest among tobacco companies, financial analysis firms, investment authorities, and institutional fund managers. It demonstrates substantial violations of two generally accepted ethical principles of business consulting: veracity and transparency. Copyright Springer Science+Business Media, Inc. 2007

Suggested Citation

  • Nathaniel Wander & Ruth Malone, 2007. "Keeping Public Institutions Invested in Tobacco," Journal of Business Ethics, Springer, vol. 73(2), pages 161-176, June.
    • Handle: RePEc:kap:jbuset:v:73:y:2007:i:2:p:161-176
    DOI: 10.1007/s10551-006-9188-0
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s10551-006-9188-0
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s10551-006-9188-0?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. MacKenzie, Ross & Collin, Jeff & Lee, Kelley, 2003. "The Tobacco Industry Documents: An Introductory Handbook and Resource Guide for Researchers," University of California at San Francisco, Center for Tobacco Control Research and Education qt5c82b367, Center for Tobacco Control Research and Education, UC San Francisco.
    2. Bae, Jinho & Nelson, Charles R., 2007. "Earnings growth and the bull market of the 1990s: Is there a case for rational exuberance?," Journal of Macroeconomics, Elsevier, vol. 29(4), pages 690-707, December.
    3. Committee of Experts on Tobacco Industry Documents, World Health Organization, 2000. "Tobacco Company Strategies to Undermine Tobacco Control Activities at the World Health Organization," University of California at San Francisco, Center for Tobacco Control Research and Education qt83m9c2wt, Center for Tobacco Control Research and Education, UC San Francisco.
    4. Bitton, A & Neuman, M D & Barnoya, J & Glantz, Stanton A. Ph.D., 2005. "The p53 tumour suppressor gene and the tobacco industry: research, debate, and conflict of interest," University of California at San Francisco, Center for Tobacco Control Research and Education qt9q13h2zh, Center for Tobacco Control Research and Education, UC San Francisco.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ivan Bozhikin & Nikolay Dentchev, 2018. "Discovering a Wilderness of Regulatory Mechanisms for Corporate Social Responsibility: Literature Review," Economic Alternatives, University of National and World Economy, Sofia, Bulgaria, issue 2, pages 145-174, June.
    2. Darlene Himick, 2023. "When Aging and Climate Change Are Brought Together: Fossil Fuel Divestment and a Changing Dispositive of Security," Sustainability, MDPI, vol. 15(5), pages 1-15, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Haruko Noguchi, 2015. "How does the Price Regulation Policy Impact on Patient–Nurse Ratios and the Length of Hospital Stays in Japanese Hospitals?," Asian Economic Policy Review, Japan Center for Economic Research, vol. 10(2), pages 301-323, July.
    2. Mulu Abraha Woldegiorgis & Janet E. Hiller & Wubegzier Mekonnen & Jahar Bhowmik, 2018. "Disparities in maternal health services in sub-Saharan Africa," International Journal of Public Health, Springer;Swiss School of Public Health (SSPH+), vol. 63(4), pages 525-535, May.
    3. Xiao Tan, 2017. "Explaining provincial government health expenditures in China: evidence from panel data 2007–2013," China Finance and Economic Review, Springer, vol. 5(1), pages 1-21, December.
    4. Holden Chris & Lee Kelley & Fooks Gary Jonas & Wander Nathaniel, 2010. "The Impact of Regional Trade Integration on Firm Organization and Strategy: British American Tobacco in the Andean Pact," Business and Politics, De Gruyter, vol. 12(4), pages 1-32, December.
    5. Julia Smith & Sheryl Thompson & Kelley Lee, 2017. "The atlas network: a “strategic ally” of the tobacco industry," International Journal of Health Planning and Management, Wiley Blackwell, vol. 32(4), pages 433-448, October.
    6. Kryzanowski, Lawrence & Mohsni, Sana, 2013. "Growth of aggregate corporate earnings and cash-flows: Persistence and determinants," International Review of Economics & Finance, Elsevier, vol. 25(C), pages 13-23.
    7. Lee, Chung-Yol MD, MPH & Glantz, Stanton A. Ph.D., 2001. "The Tobacco Industry's Successful Efforts to Control Tobacco Policy Making in Switzerland," University of California at San Francisco, Center for Tobacco Control Research and Education qt09t535s7, Center for Tobacco Control Research and Education, UC San Francisco.
    8. Kim Raine, 2012. "Obesity epidemics: inevitable outcome of globalization or preventable public health challenge?," International Journal of Public Health, Springer;Swiss School of Public Health (SSPH+), vol. 57(1), pages 35-36, February.
    9. Kim Raine & Ronald Plotnikoff & Candace Nykiforuk & Heather Deegan & Eric Hemphill & Kate Storey & Donald Schopflocher & Paul Veugelers & T. Wild & Arto Ohinmaa, 2010. "Reflections on community-based population health intervention and evaluation for obesity and chronic disease prevention: the Healthy Alberta Communities project," International Journal of Public Health, Springer;Swiss School of Public Health (SSPH+), vol. 55(6), pages 679-686, December.
    10. Louise Persson & Katarina Haraldsson & Curt Hagquist, 2016. "School satisfaction and social relations: Swedish schoolchildren’s improvement suggestions," International Journal of Public Health, Springer;Swiss School of Public Health (SSPH+), vol. 61(1), pages 83-90, January.
    11. Daniel Reidpath & Mohd Masood & Pascale Allotey, 2014. "How much energy is locked in the USA? Alternative metrics for characterising the magnitude of overweight and obesity derived from BRFSS 2010 data," International Journal of Public Health, Springer;Swiss School of Public Health (SSPH+), vol. 59(3), pages 503-507, June.
    12. Marc Le Menestrel, 2001. "Economic rationality and ethical behavior," Economics Working Papers 584, Department of Economics and Business, Universitat Pompeu Fabra.
    13. Woojin Chung & Hanjoong Kim & Seungji Lim & Sunmi Lee & Kyungsook Cho, 2009. "Factors influencing cigarette smoking and quantified implications for anti-smoking policy: evidence from South Korea," International Journal of Public Health, Springer;Swiss School of Public Health (SSPH+), vol. 54(6), pages 409-419, December.
    14. Paolo Berta & Chiara Seghieri & Giorgio Vittadini, 2013. "Comparing health outcomes among hospitals: the experience of the Lombardy Region," Health Care Management Science, Springer, vol. 16(3), pages 245-257, September.
    15. Patricia A McDaniel & E Anne Lown & Ruth E Malone, 2017. "“It doesn’t seem to make sense for a company that sells cigarettes to help smokers stop using them”: A case study of Philip Morris’s involvement in smoking cessation," PLOS ONE, Public Library of Science, vol. 12(8), pages 1-22, August.
    16. Robert Boyer, 2006. "Employment and decent work in the era of flexicurity," Working Papers halshs-00590452, HAL.
    17. Lina Cheaito & Sophie Azizi & Nadine Saleh & Pascale Salameh, 2014. "Assessment of self-medication in population buying antibiotics in pharmacies: a pilot study from Beirut and its suburbs," International Journal of Public Health, Springer;Swiss School of Public Health (SSPH+), vol. 59(2), pages 319-327, April.
    18. Marcel Ballin & Andreas Hult & Sabine Björk & John Dinsmore & Peter Nordström & Anna Nordström, 2020. "Digital exercise interventions for improving measures of central obesity: a systematic review," International Journal of Public Health, Springer;Swiss School of Public Health (SSPH+), vol. 65(5), pages 593-605, June.
    19. Louis Anthony (Tony) Cox & Edward Sanders, 2006. "Estimating Preventable Fractions of Disease Caused by a Specified Biological Mechanism: PAHs in Smoking Lung Cancers as an Example," Risk Analysis, John Wiley & Sons, vol. 26(4), pages 881-892, August.
    20. Maimoona Aboobakur & Ali Latheef & Ahmed Mohamed & Sheena Moosa & Ravindra Pandey & Anand Krishnan & Dorairaj Prabhakaran, 2010. "Surveillance for non-communicable disease risk factors in Maldives: results from the first STEPS survey in Male," International Journal of Public Health, Springer;Swiss School of Public Health (SSPH+), vol. 55(5), pages 489-496, October.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:jbuset:v:73:y:2007:i:2:p:161-176. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.