Socially Responsible Investment Research Articles

Corporate Social Responsibility Reporting and Investment: Evidence from Mergers and Acquisitions

Corporate Social Responsibility Reporting and Investment: Evidence from Mergers and Acquisitions

Does economic policy uncertainty affect corporate social responsibility investment? evidence from listed companies in China

Does economic policy uncertainty affect corporate social responsibility investment? evidence from listed companies in China

Determinant of Coal Sector Firm Value in Indonesia

A company is established to increase the firm value. The rise and fall of firm value is very important for investors and other users of financial reports. The aim of this research is to examine the influence of corporate social responsibility disclosure, investment decisions, funding decisions, and profitability on firm value. The population in this study are coal sub-sector mining companies listed on the Indonesia Stock Exchange. The sampling technique used a purposive sampling method, the research period was from 2018 to 2020. Hypothesis testing used multiple linear regression analysis with the Eviews application software version 11. The results of this study showed that disclosure of corporate social responsibility, investment decisions and funding decisions had no effect on the value of coal sector companies in Indonesia, while profitability has a significant effect on the value of sector companies

Cleansing Investor’s Conscience: The Effects of Incidental Guilt on Socially Responsible Investment Decisions

This paper explores the effects of incidental guilt on Socially Responsible Investment (SRI) decisions of retail investors. Do investors who feel guilty invest more in SRIs to clear their conscience? Are guilty investors willing to sacrifice returns to restore their moral selves? Using survey data from an online quasi-experiment among a sample of US retail investors, we find that individuals who experience incidental guilt are willing to invest more in SRI funds than those in a neutral state. We show that this effect, albeit moderate in magnitude, cannot be explained solely by differences in retail investors’ moral reasoning, attitudes towards social responsibility, risk tolerance and demographic factors. When presented with a trade-off between sustainability, risk and return characteristics of the funds, guilty investors are more willing to sacrifice returns for greater sustainability than non-guilty participants. Our research provides new evidence of the effect that incidental guilt has on the sustainable investing decisions of retail investors.

The Role of Corporate Governance in Moderating the Influence of Corporate Social Responsibility Disclosure, Investment Risk and Firm performance in Manufacturing Companies Listed on the Indonesian Stock Exchange 2018-2022

Purpose: This study aims to analyze the impact of Corporate Social Responsibility Disclosure (CSRD) and investment risk on firm performance with CEO integrity, ownership concentration, and independent board as moderating variables. CEO integrity, concentrated ownership, and an independent board of directors are hallmarks of Good Corporate Governance (GCG). Methodology: This study uses manufacturing companies listed on the Indonesia Stock Exchange during the period 2018-2022. The total sample for this study included 107 dates. Purposive sampling technique was used for the sampling method and SPSS 24 software was used for data processing in this study. Results: The results of in this research show that CSR disclosure does not have a significant impact on firm performance. Investment risk has a positive and significant impact on a company's performance. CEO integrity does not moderate the effect of his CSR disclosure on firm performance, but ownership concentration and independent board of directors moderate the effect of her CSR disclosure on firm performance. Although CEO and independent board integrity do not moderate the effect of investment risk on firm performance, ownership concentration does moderate the effect of investment risk on firm performance. Applications/Originality/Value: Even if an organization makes CSR disclosures, it does not directly impact its financial performance. Companies must understand and carefully manage investment risk to maintain and improve performance. Additionally, this study shows how ownership concentration and independent boards moderate the impact of CSR disclosure, it shows that highlighting the importance of corporate structure in optimizing corporate sustainability impact.

Aggregate Trend in the Financial Performance of Socially Responsible Investment: Case of Listed Moroccan Companies

"The development of socially responsible investment (SRI) in the mid-1990s opened up a vast area of research in portfolio construction. Indeed, investors are breaking with traditional financial theory by integrating extra-financial elements into their portfolio management strategies. In this sense, the emergence of this new type of investment has triggered a craze in the scientific community about the performance of SRI, which has led to mixed results. One of the possible explanations for this heterogeneity of results is that the methodology employed by the different studies has an inevitable influence on its result, or that the financial performance of SRI can be influenced by the measure of financial performance employed (risk or profitability variable). For this reason, the analysis of our data is conducted using a principal component analysis of financial performance, which permits the construction of a synthetic index that includes most of the variables used to measure financial performance in the empirical literature. The objective here is to capture a general trend in the impact of SRI on this composite index of financial performance. The results of the multivariate test on the composite index show that non-SRI firms have a negative and statistically significant impact on the financial performance index. Similarly, the effect of investments made by Engaged companies has a negative, but not statistically significant impact on financial performance."

Addressing Managerial Loss Aversion for the Corporate Value Creation Process: A Critical Analysis of the Literature and Preliminary Approaches

To date, the studies on managerial loss aversion have produced contradictory findings, making it impossible to: (i) identify the ultimate impact of managerial loss aversion on the value that organisations create for themselves and for their stakeholders, and (ii) mitigate the effect of managerial loss aversion to improve corporate value creation. With the aim of filling this gap, the authors of this paper first performed a Systematic Literature Review (SLR), resulting in 65 relevant papers. The 65 papers were then analysed through a Thematic Analysis (TA), which was aimed at isolating and revising the single effects of managerial loss aversion on the corporate value creation process. Once it became clear when and how managerial loss aversion leads to negative impacts on corporate value creation (such as suboptimal investments in corporate social responsibility, short-term-oriented budget expenditures, illegal corporate conduct in favourable contexts, and low demand for audit quality), a novel theoretical framework was built. This framework proposes some preliminary approaches to mitigate these detrimental effects. In particular, future empirical research may operationalise potential debiasing strategies, derived from critical analysis of the literature, to reduce managerial loss aversion in different business settings, thereby improving corporate value creation.

Gender-related effects of financial knowledge and confidence on preferences for ethical intermediaries and sustainable investments

PurposeThis study analyses the role of individuals' objective financial knowledge in shaping preferences for ethical intermediaries and sustainable investments in Italy. Another goal of this study is to assess the impact of individuals' misperceptions about their own financial knowledge and to test for gender-related differences in attitudes towards socially responsible investing (SRI).Design/methodology/approachUsing nationally representative microdata from the Bank of Italy’s “Italian Literacy and Financial Competence Survey” (IACOFI), the authors use probit models, extended to account for potential endogeneity issues, to assess the causal effects of financial knowledge and confidence on stated preferences for SRI. Empirical models also allow to explicitly assess the moderating role of gender on the effects of financial knowledge and confidence on attitudes towards sustainable investing.FindingsResults indicate that individuals' preferences for sustainable finance significantly increase with financial knowledge, suggesting that inadequate financial competencies represent a barrier to participation in SRI. At the same time, lack of confidence in one’s own financial knowledge significantly hampers attitudes towards sustainable investments. Furthermore, the authors show that women have a greater preference for sustainable finance than men and point out that financial knowledge and confidence exert heterogenous effects on attitudes towards SRI.Originality/valueThis study provides several contributions to the literature on SRI. First, the authors give evidence of the causal effect of financial knowledge on preferences for both ethical financial intermediaries and sustainable investments. Moreover, this is the first study to investigate the role of financial underconfidence bias in shaping individuals' SRI attitudes. Finally, extending previous research, the authors assess differences in SRI preferences between women and men and provide novel evidence on gender-related heterogeneity in the effects of financial knowledge and underconfidence.

Sustainable finance disclosure regulation insights: Unveiling socially responsible funds performance during COVID‐19 pandemic and Russia–Ukraine war

AbstractThe transition towards a more sustainable financial market demands transparency and trust from investors, objectives also pursued by the Sustainable Finance Disclosure Regulation (SFDR). Specifically, carefully assessing the risk‐adjusted performance of sustainable funds empowers investors to make informed decisions in alignment with their ethical and financial objectives. This article contributes to the debate on the performance of socially responsible investment (SRI) funds in times of crisis by evaluating the risk‐adjusted performance of a sample of SRI and conventional funds, ranked in light of the SFDR, during the COVID‐19 pandemic and the Russia–Ukraine war. Using a two‐step analysis, the results of the study show that funds with clear sustainability objectives, as defined by Article 9 of the SFDR, were able to outperform conventional funds, but only a few months after the onset of the crisis periods, thus demonstrating poor performance persistence. At the same time, sustainable funds with a focus on financial materiality, as defined by Article 8, were never able to generate significantly different risk‐adjusted performance from conventional funds. Our results show that the lack of performance persistence of Article 9 funds prevents an effective hedging role for investment strategies that consider extra‐financial criteria. They also confirm that the classification criteria introduced by the SFDR still need to be more specific and create more transparency in financial markets.

Building a sustainable future: The role of corporate social responsibility in climate policy uncertainty management

This study examines the impact of climate policy uncertainty (CPU) on firms’ investment in corporate social responsibility (CSR). We find that CPU is positively related to firms’ CSR, and the relationship is stronger for firms operating in carbon-intensive industries. Further analysis indicates that firms with strong corporate governance and financial flexibility are more proactive in their CSR activities amid CPU and CSR alleviates the adverse impact of CPU on the cost of debt. Overall, our evidence suggests that firms engage in CSR as a part of their strategies to mitigate the risks associated with uncertainty in climate policy.

The Impact of Corporate Social Responsibility on Corporate Financial Performance --An Empirical Study of Chinese Energy Firms

As the impacts of environmental pollution and climate change on humanity have become increasingly severe, achieving sustainable development has heightened global concerns in recent years. An increasing number of companies have recognized the importance of corporate social responsibility (CSR) and are actively investing in enhancing their performance. Moreover, an increasing number of investors are considering social factors when making investment decisions. Although the potential impact of CSR on corporate financial performance (CFP) is a growing interest in related research filed, there still needs to be consensus on their relationship. This study seeks to address this gap in the context of the Chinese energy sector. By conducting fixed effect panel regression on the CSR scores, accounting financial indicators, and fundamental panel data of 876 listed companies in the Chinese energy sector over the past decade, this paper reveals a nonlinear positive impact of CSR on CFP. Further threshold regression is applied to identify distinct threshold values that affect different financial indicators. The findings of this paper complement the existing related research and provide valuable support and guidance for companies in the energy sector to undertake social responsibility and engage in social responsibility investments effectively.

Dynamic connectedness amongst green bonds, pollution allowance policy, social responsibility and uncertainty

PurposeThis study explores the interconnectedness and complexity of risk-varied climate initiatives such as green bonds (GBs), emissions trading systems (ETS) and socially responsible investments (SRI). The analysis covers the period from September 2011 to August 2022, using six indices: three representing climate initiatives and three indicating uncertainty.Design/methodology/approachTo achieve this, the study first examines dynamic lead-lag relations and correlation patterns in the time-frequency domain to analyse the returns of the series. Additionally, it applies an innovative approach to investigate the predictability of uncertainty measurements of climate initiatives across various market conditions and frequency spillovers in the short, medium and long run.FindingsThe findings indicate changing relationships between the series, increased linkages during turbulent market periods and strong co-movements within the network. The ETS is recommended for diversification and hedging against uncertainty indices, whereas the GB may be suitable for long-term diversification.Practical implicationsThis study highlights the role of climate initiatives as potential hedges and contagion amplifiers during crises, with implications for policy recommendations and the asymmetric effects on market connectedness.Originality/valueThe paper answers questions that previous studies have not and contributes to the literature regarding financial risk management and social responsibility.

ESG Investment Helps to Develop the Carbon Economy

ESG is an investment philosophy and enterprise evaluation standard that focuses on enterprise environment, society and governance performance rather than financial performance. After the introduction of carbon neutrality, ESG has not only become an important starting point to implement the sustainable development Goals and promote the low-carbon transformation of the economy, but also become a key standard to evaluate the comprehensive level of enterprises. Since Xi Jinping in the fifth plenary session of the eighteenth put forward five development concept, green development mode is strong into the public view, under the support of the state and enterprise consciousness, ESG investment or social responsibility investment (ESG) environment (Environment), social (Social) and governance (Governance), become the enterprise survival, economic progress and the development of emerging markets. In this social context, this paper mainly studies the development prospects of ESG investment, economic benefits, and the supporting conditions of cultural, political and legal environment. Seek a more scientific and efficient way to develop ESG investment to promote the transformation and upgrading of the carbon economy.

Exploring the research landscape of socially responsible investment through bibliometrics

The ethics of investing are more important than ever in light of the pressing issues of global warming, social inequality, human rights violations, and the need to achieve sustainable development objectives. Investors are increasingly aware of their pivotal position in promoting ethical practices and actively seek investment opportunities that align with these objectives. Socially responsible investment (SRI) arises as a means of investing in companies that prioritize ethical practices, support sustainable development, and generate positive financial returns. We conduct a bibliometric analysis of the research landscape in the field of SRI and sustainable investing, investigating bibliographic coupling to identify the dominant themes and areas of interest. Our analysis reveals the existence of five major themes that define research in this field: i) sustainability and SRI, ii) sustainability and financial markets, iii) sustainable investing and corporate responsibility, iv) green finance and supply chain management, and v) CSR and financial performance in sustainable finance. These themes provide a comprehensive overview of the most important research topics and areas of interest within the field of SRI and sustainable investing. We intend to investigate the interrelationships between these themes, identify emergent research areas, and examine the impact of the findings on sustainable investment strategies. To further understand the concepts and their relevance to SRI, we prefer to perform a qualitative investigation of the identified issues. This study provides a comprehensive examination of the SRI and sustainable investing research landscape by employing bibliometric analysis. This study's findings will contribute to the scholarly understanding of sustainable investing and provide investors, policymakers, and financial institutions with valuable insights for making informed decisions and promoting sustainable and ethical investment practices.

Are Retail Investors in Emerging Economies SRI Ready?

Socially responsible investment (SRI) is a contemporary idea to describe investing that incorporates social, ethical and environmental dimensions. Under the Theory of Planned Behaviour lens, the current study examines the role of attitude, subjective norm, perceived control behaviour and moral norms in explaining retail investors’ investment intention towards SRI. The study adopted the quantitative approach of research and gathered the required data using the judgmental sampling method. This research uses structural equation modelling to present a model that better explains the role of attitude, subjective norm, perceived control behaviour and moral norms in understanding retail investors’ investment intentions for SRI. The current study proposes and successfully validates the use of subjective financial literacy as a perceived control behaviour variable in studying the investment intention of SRI. The finding suggests that retail investors’ intention to invest in SRI is significantly positively influenced by attitude, subjective norms, moral norms and subjective financial literacy.

The power of ethical words

AbstractIn this research, we analyse the impact of the inclusion of ethical expressions in the prospectuses of socially responsible (SR) mutual funds on money flows. We contribute to the existing literature by proposing a text‐based measure that integrates three attributes that are relevant to whether clients are attracted: exclusiveness, intensity and lexical diversity. We analyse a sample formed of 266 SR US equity mutual funds in the period 1999–2019. Our findings show that both the proposed indicator and other alternative partial proxies based on textual data have a positive impact on the money flows of the SR funds. This effect is more relevant in the case of SR mutual funds belonging to smaller families. Besides, persistence in money flows is more intense for SR mutual funds that are more attractive because of their ethical expressions. Another finding shows that return‐chaser behaviour occurs among all SR investors, independently of the level of text attractiveness of the mutual funds in which they invest, revealing that they take into account both financial and non‐financial outcomes. Our results indicate that policymakers should control fund prospectus information, given its importance for investors' decisions. In addition, managers should be especially cautious with the information provided in prospectuses because of its impact on investor decisions.

Does Rivals’ product recall increase Firm’s product related corporate social Responsibility?

This study examines the effects of peer firms’ product recall events on focal firm’s product related corporate social responsibility (CSR) investment. I theorize that peer firms’ product recall events generate negative reputation spillover and attract strong scrutiny by shareholders in the focal firm, which makes the focal firm engage in product related CSR to insure against the negative reputation spillover of product recalls. I find that focal firm increases its product related CSR activities following product recall by peers. Meanwhile, this effect is stronger when the peers occurring product recall have greater market share, larger size, or more media coverage. The findings suggest that the reputation spillover of product recalls affects a focal firm’s decision to become more socially responsible.

Corporate Social Responsibility Investment by Public Sector Organisations: A Systematic Literature Review

Corporate Social Responsibility (CSR) has gained prominence in business studies due to the increasing awareness of its importance to firms and stakeholders. Unlike previous CSR studies, which mostly focused on private sector organizations, this study systematically reviews CSR investment by public sector organizations. The objectives include identifying empirically tested CSR dimensions, theories mostly applied in public sector organization CSR studies, theories mostly applied, the industries in which CSR-public sector studies were conducted, and areas suggested for further studies. Findings reveal that social and legal CSR dimensions were the most single-focused dimensions in CSR-public sector studies, with limited attention to economic or environmental CSR as a single dimension. However, social and environmental dimensions rank highly in terms of combined dimensions. The findings also indicate that 78% of the reviewed empirical studies adopted stakeholder theory to explain CSR investment by public sector organizations. On industrial focuses, 54% of the reviewed studies focused on more than one industry. It was also revealed that the manufacturing industry was the most investigated, while water and construction were among the least investigated sectors. Further research was suggested in understanding the impact of CSR investment on firm performance, factors influence CSR investment, use of large sample size, use of different industries and geographical areas, and the trend on CSR investment by organizations. This study contributes to the body of knowledge by establishing research gaps for future CSR investment studies in public sector organisations.

Nudges for responsible finance? A survey of interventions targeted at financial decision making

AbstractIn a comprehensive review, we investigate how nudges can help financial decisionmakers allocate funds according to ethical considerations to promote sustainable development. We begin by identifying the main nudge frameworks and highlighting their many similarities, including the use of default options, making information more salient, and manipulating the framing of incentives. While nudges have been used in personal finance primarily to promote saving for retirement or avoiding credit card debt, they can also encourage socially responsible investment (SRI). We propose potential nudges in SRI and provide a primer on nudge implementation by reviewing methods for selecting effective nudges and ensuring their ethical acceptability.

Corporate Social Responsibility, Financing Constraints and Innovation Investment

This paper takes the relevant data of China's A-share listed companies in Shanghai and Shenzhen from 2011 to 2019 as the research samples to explore the relationship among corporate social responsibility (CSR), financing constraints and innovation investment. The results show that CSR has a significant positive contribution to innovation investment. CSR is negatively correlated with financing constraints, and financing constraints play a partial mediating role between CSR and innovation investment.