“Doing Well While Doing Good” Revisited: A Study of Socially Responsible Firms' Short‐Term versus Long‐term Performance

Abstract

This article reexamines the “doing well while doing good” debate within the financial management literature, using comparisons among socially responsible mutual funds (SRMF(, the NYSE Composite Index, and a portfolio made up of firms most valued by SRMF managers )MostSRF(. The performance of MostSRF did no better or no worse than the over all market or SRMF in three to five year comparisons. However, results from the ten‐year performance comparison refute earlier studies and indicate that the market prices social responsibility characteristics in the long run. Given MostSRF out performed the other two indices in this time line, a new paradigm for understanding the impact of SRI is revealed.