Abstract
As a key facet of sustainable development, environmental, social and governance (ESG) discretion on stock market investment decision is gaining prevalence following the global financial crisis. ESG considers the sustainable return, risk reduction, and accountability aspects of investments. This study is an exploration of the individual stock market investors’ preferences for ESG issues and the influence that purpose of investment has on investment decision-making, by testing the investment horizon as a moderator. The theoretical background was taken from the theory of planned behavior (TPB), goal setting theory (GST), and the behavioral asset pricing model (BAPM). The study uses the sequential mix method of research, starting with an interview followed by a survey, which was conducted among individual stock market investors in Bangladesh, using simple random sampling. Structural equation modeling (SEM) analysis was carried out using Warp PLS version 6.0. The key findings of this study delineate the effect of ESG issues and the purpose of investment on investment decision-making. The contribution of the study signifies the moderating role of the investment horizon, which confirms the importance of the long-term horizon as a time and risk diversification factor. The sparse utilization of the United Nations Global Compact (UNGC) (2004) and Thomson Reuters Corporate Responsibility Index (TRCRI) (2013) as measurement scales in this study is mentioned. This study has made practical contributions for managers, investors, and regulators.
Highlights
The business world has encountered drastic changes in the last few decades due to the global financial crisis (GFC), which evidenced the inescapable interconnectivity of the world economy
A questionnaire survey was conducted on individual stock market investors of the Dhaka Stock Exchange Limited (DSE) and Chittagong Stock Exchange Limited (CSE), with simple random sampling used to collect final data, as this was the main part of the research pertaining to the objectives
To analyze the quantitative data, we used the Statistical Package for Social Science (SPSS) version 22.0 software and structural equation modeling (SEM) in conjunction with Warp-PLS version 6.0, which is a definitive software for Structural equation modeling (SEM) to present partial least squares (PLS) algorithms, as well as factor-based PLS algorithms that account for measurement error and produce estimates of true composites together with factors [83,84]
Summary
The business world has encountered drastic changes in the last few decades due to the global financial crisis (GFC), which evidenced the inescapable interconnectivity of the world economy This escalated to the apprehension of companies for unethical behavior, oversight of risk, accountability, and the ability to manage stakeholders strategically. In the process of this mutinous change, stock market investors have become concerned regarding environmental, social and governance (ESG) issues of the companies involved. Such views are gaining prevalence and are regarded as one of the key elements towards the sustainable development of a nation and the world in a broader sense, considering that ESG combines sustainable return and risk reduction, with accountability towards the environment and society. The core belief of ESG investing delineates that the investors, society, and environment can benefit from including ESG information in the investment decision
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