Impact Of Investment Research Articles

The Use of Sustainable Financial Instruments in Relation to the Social Impact Investment: ESG Policies, Capital Markets’ Approach and Investors’ Protection: An Innovative Perspective for a Global Surveillance Authority

Social Impact Investment (SII) refers to the provision of finance to organizations addressing social needs. It is intended to achieve both a social impact as well as garner financial returns. Thus, SII may be understood as a business case for what was previously considered mostly philanthropic activities. In the case of SRI (Sustainable and Responsible Investment), investors decide in which company to invest on the basis of Environmental, Social and Governance (ESG) criteria. They consider a company's performance with respect to its effects on nature, its relationships with employees, clients and society, and the transparency of its governance. Where possible, companies should provide quantitative, comparable and forward-looking performance metrics to facilitate ESG integration. It is recommended that companies should use credible indicators which are included in internationally recognised reporting frameworks like GRI, SASB, IIRC, TCFD, CDP or UNGC. Companies should disclose their methodology and provide explanations to support quantitative indicators (ESG metrics), establishing the link between ESG and financial performance. The investor perspective is in important issue, which should be taken under consideration by European and local supervising authorities, under the provisions of the Market Abuse Directive and the MiFID, especially after the introduction and use of ESG and sustainable financial instruments, in both, Banking and Capital Markets. Therefore, SII can be a very useful tool for achieving EU Social Policy objectives. EU efforts (DG EMPL/FISMA) can be targeted at four specific aims that concern impact measurement: 1) promotion of the standardisation of impact measurement through the further development of the taxonomy regulations to include social objectives or the creation of standardised guidelines or the further development of ESG metrics; 2) capacity building in the area of impact measurement; 3) increasing the availability of the data needed; and 4) the promotion of additional and more specialized sustainable financial instruments linked to the Banking Sector and Capital Markets, which in turn will leverage more the total investment amount derived from the InvestEU tool and offer to all stakeholders more flexibility. Therefore, the global liquidity will be increased, and a strong economic turmoil could be avoided under the surveillance of a theoretically established Global Surveillance Authority. The use of sustainable financial instruments by a P.E.S. (social enterprise) under a public-private partnership (PPPs) is also feasible and socially rewarding.

Impact of Allied Factors on Investment Performance, Mediating Role of Investment Decision: Evidence from Investors in Lahore

In traditional finance, investors are assumed to behave rationally while making financial decisions. In contrast, proponents of behaviour finance argue that investors are not always rational. In fact, the financial decisions they make and their investment performance are influenced by various behavioural factors. So, the literature is filled with a plethora of studies on finding the impact of behavioural factors on decision-making and investment performance. However, studies on emerging economies like Pakistan are scarce. Further, most studies focus on finding only behavioral factors' impact. However, the current study takes into account behavioural factors, psychological factors, market factors, social factors, and financial literacy together in one model. This study aims to determine whether psychological factors, market factors, social factors, and financial literacy impact investment performance while testing the mediating role of decision-making. The study uses SEM for the analysis. Nine hypotheses are being investigated. The outcomes of the PLS-SEM mediation analysis suggest a mediation effect in all of the parameters investigated in this research study. Interestingly, the results of this study are persistent with the prospect theory and assert that investors do not always make rational judgments when making financial investments. Thus, study results are helpful for retail investors to understand the mistakes they make while making investment decisions.

Hardwiring corporate goodness

Journal of Applied Corporate FinanceEarly View ORIGINAL ARTICLE Hardwiring corporate goodness Terrence Keeley, Corresponding Author Terrence Keeley [email protected] CEO - 1PointSix LLC, Amagansett, New York, United States Correspondence Terrence Keeley, CEO - 1PointSix LLC. Email: [email protected]Search for more papers by this author Terrence Keeley, Corresponding Author Terrence Keeley [email protected] CEO - 1PointSix LLC, Amagansett, New York, United States Correspondence Terrence Keeley, CEO - 1PointSix LLC. Email: [email protected]Search for more papers by this author First published: 16 June 2023 https://doi.org/10.1111/jacf.12559 This is a slightly edited version of Chapter 10 of Terrence Keeley's new book, SUSTAINABLE: MOVING BEYOND ESG to IMPACT INVESTING (New York: Columbia University Press, 2023), pp. 153–168. Read the full textAboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Early ViewOnline Version of Record before inclusion in an issue RelatedInformation

To invest or not to invest in sanitation: The role of intra-household gender differences in perceptions and bargaining power

We exploit novel data collected within a randomized controlled trial of a sanitation microcredit intervention to study how intra-household gender differences in perceptions of costs and benefits of sanitation impact investment decisions. We show that – as long as the wife is involved in household decision-making – the intra-household differences in perceptions we document influence borrowing and investments: uptake of the sanitation loan is higher among households where the wife has higher benefit perception, whereas successful conversion to a toilet depends on differences in monetary cost perceptions. The estimated effects are consistent with the predictions of a model of intra-household decision-making.

Unanswered questions in entrepreneurial finance

ABSTRACT While the academic literature on entrepreneurial finance has expanded exponentially, many gaps in our knowledge remain. This is driven by digitalization impacting the development of new investment types such as crowdfunding and ICO, the emergence of new investors based upon digital technologies, and the functioning of existing investors. Next, the supply of entrepreneurial finance has become more diverse and new types of investors developed, like incubators and accelerators, family funds, impact investors, or sovereign wealth funds. This increases the sources and type of funding new ventures can get access to. Third, investors pay increasingly attention to non-financial goals like providing solutions to environmental or societal challenges. This paper explores these trends and suggests avenues for future research.

At the Frontier of Sustainable Finance: Impact Investing and the Financial Tradeoff; Evidence from Private Portfolio Companies in the United Kingdom

Drawing from the extremely novel impact investing landscape and the limited existing literature on the topic, it appears that investing in social enterprises should come at the cost of partially sacrificing financial returns to invested capital. This paper investigates the existence of this tradeoff by assessing how the performance of impact investing funds compares to that of traditional private equity and venture capital operators. Focusing on portfolio firm operating performance, we construct a dataset of 85 impact-investing observations and 5310 traditional observations over the period ranging from 2009 to 2020, in order to compare the performance of the traditional investor-backed firms with those of sustainable companies participated by social impact investors. Advanced matching methods such as Radius and Kernel matching suggest that the composition of the shareholding structure significantly affects the profitability of the company, with traditional firms outperforming their socially-concerned counterparts. Looking instead within the subsample of impact investor portfolio companies, and focusing only on the post-investment observations, we analyze how the percentage owned by the impact investors impacts the performance of the owned companies. The results show that, similarly to traditional ownership, a greater share controlled by impact investors leads to higher returns.

Relationship between unemployment and policy uncertainty in Nigeria: ARDL evidence from 1990 to 2020

PurposeApart from providing theoretical clarity, the present research aims to validate empirically that the EPU will be adversely affecting these key macroeconomic variables and that managing EPU matters for economic policymaking in Nigeria.Design/methodology/approachA dynamic autoregressive distributed lag regression model is employed to analyse the relationship from 1990 to 2020. Based on the theory of multiplier effect, the analysis could examine the positive and negative changes in policy uncertainty, as well as the reliability in macroeconomic activities such as unemployment, infrastructure development and foreign direct investment inflows.FindingsThe findings revealed EPU is cointegrated with the key economic variables in focus. Further, the negative impact of EPU on corporate investment in FDI and positive impact of EPU on unemployment confirm for both short and long-run. However, the impact of EPU on government investment in infrastructure development is found to be positive which does not confirm the expected hypothesis.Practical implicationsDynamic relationship between policy uncertainty and macroeconomic activities in Nigeria seems to exist. Taking risky decisions has impact and causing a high unemployment rate, poor infrastructural development and lower foreign direct investment inflows in the country.Originality/valuePolicy uncertainty in Nigeria is determining. Despite that, very little research found that rising uncertainty issues may significantly affect unemployment, investment in infrastructure and foreign direct investment inflows adversely. Therefore, policy uncertainty is an open space for economic activities to thrive in Nigeria, especially unemployment.Peer reviewThe peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-08-2022-0555

Disposition Effect: Does Investor Confidence Matter? Examining Service From Securities Brokerages

Purpose: This study aims to analyze the role of training program to develop novice investors confidence in buying a stock. Novice investors undergo dilemma to buy stock due to limited knowledge which resulting disposition effect. Research regarding disposition effect which associated with training for novice investors is still limited
 
 Theoretical framework: The disposition effect is the tendency when investors sell stocks that have the potential to experience future profits early, otherwise investors tend to hold stocks that have the potential to experience losses for too long so that investors tend to experience losses. 
 
 Design/methodology/approach: The research using quantitative approach and employ purposive sampling method with a total sample of 192 respondents. Respondent criteria are novice investor and have limited knowledge in stock market. Each respondent is required to fill questionnaire to obtain data which consist of strongly disagree and strongly agree. Validity, reliability, and hypothesis testing is examined
 
 Findings: The results indicate investor training influence investor experience. The result also showed that the training program and investor experience impact investor confidence. The result implies investor need training and experience to reduce disposition effect. The result represents training program, investor experience, and investor confidence affect investor satisfaction
 
 Research, Practical & Social implications: The research is asserted that novice investor with limited experience and knowledge need do practice. Novice investor understanding to buy stock will develop investor confidence.
 
 Originality/value: The result elaborate training for novice to develop investor confidence and experience. The more experienced investor will reduce disposition effect. Previous research is lack of disposition effect elaboration and its implication on investor satisfaction.

Investment decisions under uncertainty: Corporate venture capital as a real option

AbstractThis paper aims to assess the role of corporate venture capital (CVC) as option‐creating investments and how corporate investors practice CVC options in their investment decisions. Using a sample of 4206 US firms between 1998 and 2019, our results show that sector fit and geographic fit reduce uncertainty and impact investors' decisions on CVC investments. When exogenous uncertainty is mitigated, CVC‐backed companies experience higher investment amounts than independent venture capital funds (IVC)‐backed ones. The results evidence that follow‐on investments motivate IVC‐backed companies to exit via IPOs. At the same time, a prolonged duration for the organisational learning option leads CVC‐backed companies to exit via acquisition. This study helps investors to reduce uncertainty surrounding investments and improve the usefulness of their real options. We also provide implications for how policymakers target and develop an entrepreneurial ecosystem.

Financing for a Sustainable Dry Bulk Shipping Industry: What Are the Potential Routes for Financial Innovation in Sustainability and Alternative Energy in the Dry Bulk Shipping Industry?

Environmental, regulatory, and economic exogenous disruptions force companies within the maritime shipping industry to become more sustainable. Financing for implementing the necessary changes is particularly challenging for these companies, considering their narrow margins. With the changes in the shipping industry being intrinsically capital-intensive, funding is a particular issue, as few institutional or individual investors can provide the capital required. This paper investigates the challenges of financing. Drawing from the theory of pecking order on debt and equity, it conceptualizes the relation between the modes of financing for the maritime shipping companies and the nature of the disruptions. Initially, we analyze the various IMO decarbonization regulations, GHG emissions, alternative fuels, and green energy. Moreover, the relationship between fleet operation and management and finance is explored. The paper provides a framework to illustrate from a financial perspective the plethora of challenges and disruptions that have troubled the industry. We then recommend more suitable funding routes for companies to gauge the proper mix of equity and debt levels, bonds, and leverage, based on the company’s characteristics, such as size or ESG performance, as analyzed via the lens of corporate financing, along with the nature of the disruption, such as high inflation or geopolitical conflicts. In more detail, the paper focuses on key environmental, social, and governance (ESG) drivers both in the short-term and the long-term within the dry bulk shipping industry: impact investing and ESG factors are driving new investment opportunities and contributing to risk mitigation and long-term investment returns. The most pressing financial and economic questions of the time are wildly extended equity and bond valuations, inflation, and the conundrum most central banks face. Given these uncertainties, from an investment perspective for equity markets, the risk/return outlook for risk assets is skewed to the downside, making a cautious approach prudent for maritime shipping companies.

Impact investment deal flow and Sustainable Development Goals: “Mind the gap?”

AbstractWe examine the linkage between the available impact investment deals and Sustainable Development Goals (SDGs) to ascertain to what extent those deals are likely to achieve the aims of the SDGs, that of a sustainable and prosperous world. Drawing on 292 available deals, we find that most deals are directly or indirectly linked to only four of the 17 SDGs and are concentrated in two regions of the world. Accordingly, we conclude that impact investing has a significant imbalance in the SDG–deal flow–region nexus. Without addressing such an imbalance, impact investing will have only a limited impact on overall SDG attainment. Therefore, we also share some thoughts on addressing the imbalance.

Is sustainable investing good for the environment

Purpose- The primary objective of this research initiative is to gain insight to the conceptual layers of sustainable investing and to shade light on the ESG impact, ESG rating diversities and on the counterproductivity issues with respect to sustainable investment strategies. Conceptually, the Sustainable Investing are numerous and evolving. The old definition of “An investment is sustainable if the investment is fortified with “financial returns only” is transformed into an ESG-investing mode. Within this transformatory process a new and rapidly evolving type of investment called ‘Impact Investment” has heated the debate. The strategic focus might be on the “Impact First Investors” or on the “Financial First Investors” on many sectors and themes (Jaquier, 2011:25). A more recent definition “Fiduciary Investing” defines an Investment as sustainable, if the investor seeks to minimize the negative impact or the losses from ESG related investments. Major impact areas are financial services, agriculture, energy, environment, community housing, water, education and health. Given the broad range of definitions and areas, the global sustainable fund assets under management rose by 8% over the last quarter to USD 3 trillion at the end of December 2023 (Morningstar Manager Research, Jan. 25, 2024). Within the impact capacity of the Sustainable Investments, investor impact happens through three different impact mechanisms called Shareholder Engagement, Capital Allocation and the Indirect impacts (Kölbel, J.F. et all, 2020). Hartzmark, S. M., and Shue, K., aims to reveal emprically the granularity of the “impact elasticity” and hence the emission levels and ratios for green and brown firms based on the changes of their implied cost of capital, financial performance, interim returns, financial distress, leverage, productivity shocks and portfolio holdings of sustainable funds. Investors can screen out investments further based on the ESG ratings criteria. In this respect, Sustainable Investors representing over USD 100 trln in combined asstes are heavily usind the ESG ratings of different rating agencies (Berg, F., et all, 2022). However, ESG ratings which increasingly influence Sustainable Investment decisions, are very much diversified by different rating companies. The divergence of ESG ratings introduces uncertainity and performance evaluation difficulties for the decision makers (Berg, F., Kölbel J.F., Rigobon, R., 2022:1316). Methodology- The ESG Divergence research is based on the critical evaluation of the data stemming from six different ESG rating providers such as KLD, Sustainalytics, Moody’s ESG, Refinitiv, MSCI and S&P Global. A new taxanomy is developed for the divergence of ratings are evaluated on the basis of scope, measurement and weightings diversities of the models. The counterproductivity analysis for Sustainable Investing strategies is based on the definition of “impact elasticity”. The impact elasticity is measured as the level change in a firm’s emissions intensity for a unit change of its cost of capital. Findings- Sustainable Investing differs from conventional investments considerably. According to Kölbel, J.F. et all, Sustainable Investors, whose decisions are based primarily on the layer of social impact, mechanisms, should pursue shareholder engagement throughout their portfolio, allocate capital to sustainable companies whose growth is limited by external financing conditions, and screen out companies based on the absence of specific environmental, social, and governance practices that can be adopted at reasonable costs. Conclusion- A very important conclusion stemms from the fact that, in the absence of green substitutes for entire brown industries, the diminishing sustainable investments could contribute to more emission levels. Accordingly, the greening of a sector should come from the internal and revolutionary Dynamics withing the brown industries. Keywords: Sustainable investing, ESG ratings, corporate social responsibility, ethical investing. JEL Codes: G4, O44, Q56, D81

An Innovative Approach to the Dismantlement of a Forensic Psychiatric Hospital in Italy: A Ten-year Impact Evaluation.

This study aimed to evaluate the impacts of a pilot project concerning the closure of a Forensic Psychiatric Hospital (FPH) inspired by Human Development Theory and the Capability Approach. The dismantlement of the FPH of Barcellona Pozzo di Gotto (Sicily Region in Italy) began in 2010 with the pilot project Luce é Libertà and ended in 2017. With the closure of six FPHs, Italy officially became the first country worldwide to close such institutions. After the closure of FPHs, some critical issues emerged, and the debate shifted to developing small-scale facilities and residences for the execution of security measures (RESM). However, few studies have provided results on the cohort of patients discharged from FPHs. Following are the objectives of this study: a) Assessing the effectiveness of the pilot project in terms of better functioning accordingly to the Classification of Functioning of Disability and Health (ICF) framework, social and labour insertion, health conditions, level of dangerousness to other, rate of readmission in forensic services, b) cost analysis, and c) describing how the CA has been applied and translated into methodological and administrative devices and concrete intervention strategies. A pre-post evaluation design was performed with a comparison between the intervention and the control group for the healthcare cost analysis. Data were collected from 2010 to 2019 at three points: T0) as a baseline, T1 and T2) for the follow-up. The instruments are a structured questionnaire, the Scale HoNOS Secure, 4 sub-scales of ICF (Activity and participation dimensions: sociality, culture, and knowledge, daily life, income, and work) (Cronbach's Alpha from 0.76 to 0.94), and n.20 interviews with key stakeholders and beneficiaries. Main results include a) the discharge of 55 patients through the use of a person-centered approach and the Personal Capability Budget (PCB), b) the expansion of substantial freedom of choice and the improvement of ICF score (t-test Sig. <, 02), c) the reduction of the risk for others and themselves (Mean Diff. -2,15 Sig. .000), d) at T2 42% of beneficiaries achieved a job placement and 36% were living in one's own home, e) at T2 the need of security measures has reduced from the initial 70% to 6.8%, and f) reduction of the healthcare costs from the fourth year onwards. Indications emerge to support processes of deinstitutionalisation and capabilities expansion through innovative models, a person-centered approach supported by PCBs, social finance, and social impact investments.

Impact Investing: What Problems are Researchers Concerned About? Publications Digest

The field of impact investing is the point of convergence between a wide range of academic disciplines, and as the market for social entrepreneurship and reflection on measuring social impact develops, the problems taking place within these processes are being categorized actively. What the researchers in the impact investment market are focusing on is the topic of our digest of publications of the second half of 2022.

Impact Investment 2022 Results: A Perspective from the Positive Changes Journal Award Winners

On December 7, 2022, the first annual award of the Positive Changes, a popular science journal about impact investments and social impact assessment, was presented. The award recognizes experts, journal contributors, and organizations for their input into the development of social and economic impact assessment. Read our article about who received the award and what for, how the winners of the award remembered 2022 in terms of impact and development of evaluation methodology, and what key events and new approaches can be highlighted.

How do impact investors evaluate an investee social enterprise? A framework of impact investing process

PurposeImpact investors differ from venture capital firms as they invest to create social and commercial value. This paper pursues the question: how do impact investors select social enterprises? The aim of this study is to understand the selection and investing process of impact investors.Design/methodology/approachThis study developed a database of 115 impact-investing firms across different geographies. Emails were sent to investors associated with each of the impact-investing firms found in the database, out of which 32 replied with consent for a telephonic or in-person interview.FindingsThe significant findings presented in the paper are the following. First, this study shows the impact-investing selection process model. The four major steps in the selection process are context, investment focus, venture analysis and decision. In each step, social values and missions become the defining characteristics of the selection process. Second, the findings also discuss the typologies of impact investors as a function of their selection approaches.Practical implicationsThis paper discusses the impact investing strategy among social enterprises. It provides a framework for impact investing among investee social enterprises. As an impact investing professional, one learns investment strategy through this paper.Social implicationsImpact investing is a growing field. It is believed that impact investing could greatly impact sustainable development goals, climate change goals and help in inclusive development. This study helps to further understand impact investing process and hopes to help social enterprises and impact investors make a better match, thereby, creating a greater overall social and environmental impact.Originality/valueThis study helps both practitioners and academics to understand the complexity of impact investing. This study helps develop heuristics that impact investors may use to make investments. This study provides a framework for investing, which the impact investing firms may use to invest.

Impact Investing in Ghana: A Multiple-Case Study

Contrary to extant studies on impact investing, which provide understanding from a demand-side perspective, this study changes this perspective by exploring the approach to impact investing from a supply-side viewpoint. Using a multiple-case study design and qualitative data from two Ghanaian impact investment organisations, significant strides are made to the limited but growing impact investment literature by providing in-depth descriptive account based on three dimensions: (i) funding approach, (ii) engagement approach, and (iii) exiting approach. Our findings provide evidence of an impact investment approach characterised by the concurrent motive of financial and social/environmental returns, longer time horizon, and engagement or provision of non-financial support. We conclude that this approach leverages the tools of venture capital to realise social or ecological purposes. The findings can potentially assist investors and entrepreneurs to make informed decisions to navigate the complexity surrounding the emerging impact investment environment in Ghana and economies of similar nature. Additionally, it will aid in developing explicit policies to regulate the sector, increase its awareness, and widens its appeal and use to serve the intended purpose of addressing social and environmental problems.

Governing Behaviours of Impact Investors in India: A Path to Balance Double Bottom Line

Impact investors need to consider both financial and social outcomes when making investments. Impact investors find governance to be a very critical aspect in guiding the investment decisions of impact investors to balance their double bottom lines. This research study tries to evaluate the role of the governing behaviour of impact investors on the financial performance and social impact of their investments. The structural model is used to describe the link between the governing behaviour of impact investments and their financial and social performance. The findings show that agency-oriented governing behaviour is significantly and positively related to financial performance, whereas stewardship-oriented governing behaviour is significantly and positively related to social impact.

Impact Investment Assessment methodology for Early-stage Start-up Investment Screening

Over the next five years, Indonesia is expected to absorb an estimated USD 23 billion in impact investments which could be materialized in the form of a Public-Private Partnership (PPP), and one of the beneficiaries of foreign investment is a start-up company. It is estimated that Indonesia will create thousands of potential start-ups that will disrupt the economy of Indonesia. As a developing country brimming with high potential growth, among its vast youth population, there are millions of entrepreneurs with brilliant ideas that may benefit not only themselves but also society.[13] One of the steps for investing in impact investment is screening and scoring the ESG and SDG Alignment using standardized and tested methods created by accredited international institutions. Start-ups that are still in the early-stage phase are rather very difficult to be assessed using the currently available global standard methodology, therefore making early-stage start-ups out of reach for Impact Investment and early-stage start-ups have a high potential in multiplying their valuation to drastically increase venture capital profits, creating an assessment tool that is necessary to eliminate the lost opportunity. Venture capital requires an assessment tool for their investment process, especially for early-stage start-ups. Currently, there are yet such scoring methodologies or standards that are suited for Indonesian early-stage start-ups. Many start-ups in their early don’t have adequate resources to implement an ESG framework or commit to any SDG alignment by applying established international ESG frameworks and standards. But there are few start-ups that commit to ESG and SDG Value to their business model that create social and environmental impact while profiting as a business. The objective of this research is to create an Impact Investment assessment tool based on ISS ESG impact rating and MSCI ESG SDG alignment assessment methodology that will be adjusted for Indonesian early-stage screening purposes and to be implemented in Venture capital preliminary in the business process.

Impact Investment Assessment methodology for Early-stage Start-up Investment Screening

Impact Investment Assessment methodology for Early-stage Start-up Investment Screening