"Despite legislative initiatives by the federal government such as Sarbanes-Oxley and well-publicized images of senior executives in handcuffs being "brought to justice," investors' confidence in the financial markets' integrity and transparency remains low," said Matthew Mole, co-founder of Rating Research. 

The study found that ethics is a major contributor to the continued distrust of senior management. A paltry five percent of individual investors said they are "very confident" that senior leadership of publicly traded companies engage in ethical business practices. This measure has shown virtually no improvement since the tracking study began last spring.

"Most companies' response to the recent scandals has been to shore up their internal governance procedures. We suspect investors share our perception that governance is about legal compliance, while ethics is about character and integrity," Mr. Mole continued. "Until corporations visibly demonstrate those traits, investors will be very reluctant to rush headlong back to the stock market."

Investors also continue to indicate that information about a company's reputation is important to them. In the latest wave of the survey, 58 percent of investors said information about corporate reputation is more important to them today than it was a year ago. In contrast, investors do not believe that corporate CEOs are sufficiently focused on the reputation of their companies. 

Mole said "it will require a vigorous and sustained effort on the part of governmental institutions, Wall Street firms, issuers themselves and other market players to restore investors' confidence."