Seven hundred and twenty employees of three retail companies completed a questionnaire which evaluated their companies and assessed their own levels of personal integrity. The companies differed significantly in their levels of inventory shortage. These levels were not related to the crime rates in the surrounding areas, however. The levels of shortages were associated with the honesty of the employees and with other company characteristics. The company with the lowest level of shortage had employees with the highest honesty scores, while the lowest honesty scores occurred in the employees of the company with the highest shortages. The company with the lowest shortages had established a climate of honesty characterized by a well-defined code of ethics, a good system of internal accounting controls, and a pleasant work environment. The company with the highest shortages had the most dissatisfied employees and seemed to have the harshest discipline system in which employees were often checked and openly punished if caught stealing. The employees of the companies were similar with respect to financial pressures and opportunities to commit fraud. Data tables and a list of 13 references are provided.