Socially Responsible Investment Research Articles

The Impact of Female Executives on Corporate Development from the Perspective of ESG Investment

In recent years, gender equality has increasingly become the focus of international attention. The proposition of gender equality is widely used in politics, economics, and other fields. As a new investment concept emerging in the field of global economic law in the last decade, when assessing the potential for long-term growth, environmental, social responsibility, and governance investments also consider the social and long-term value of businesses. In the process of pursuing sustainable development, environmental and social responsibility, governance investment, and the embodiment of gender equality in enterprise management and business investment are inseparable. The research topic of this paper is the impact of female executives on corporate development. This paper mainly uses data from the China Stock Market and Accounting Research Database and the State Intellectual Property Office. Through legal study and data analysis, which are the three perspectives of the environmental, social responsibility, governance, and investment approaches. Then the paper evaluated the data using the Dow Jones Sustainability Index. Score the sample data with the Dow Jones Sustainability Index, and compare the final score to determine the sustainable development ability of the company. Deeply considers the role of female executives in the enterprise and the existence of female executives on investors, boards and even the entire company.

CEO narcissism and CSR: role of organizational virtue orientation

PurposeThis study aims to explore how CEO narcissism drives investment in corporate social responsibility (CSR) and its mediating mechanism.Design/methodology/approachThis study includes panel regression based on archival data.FindingsCEO narcissism leads to signaling of organizational virtuous orientation that results in increase in CSR investment.Originality/valueRelevance of CEO traits on CSR remains unexplored in emerging markets context, especially the underlying mechanism. This study uncovers these mechanisms.

Do ESG Ratings of Chinese Firms Converge or Diverge? A Comparative Analysis Based on Multiple Domestic and International Ratings

Since the Chinese economy has transitioned to a sustainable model, the Chinese socially responsible investment (SRI) market has expanded rapidly, which has deeply stimulated the development of environmental, social, and governance (ESG) ratings for Chinese firms. Domestic agencies, such as SynTao, Rankins (RKS), Sino-Securities (SSII), and China Alliance of Social Value Investment (CASVI), and international agencies, such as Bloomberg, FTSE Russell (FTSE), and Morgan Stanley Capital International (MSCI), have launched their own ESG rating systems. These emerging ratings may provide users of information with more diverse references; however, if their results are too divergent, they may also confuse users. To what extent do these ESG rating results in the Chinese market converge or diverge? Aiming to answer this question, we used Hushen 300 index firms in 2019 as the initial sample, and selected 195 firms covered by the above seven ratings for the analysis. Firstly, by comparing the overlap in the top 100 lists of these sample firms, we found that the list overlap rate between each pair of ratings was between 66.36% and 82.35%; however, only 35% of the firms were listed in the top 100 of all seven ratings. Furthermore, the Pearson correlation analysis showed that the correlation coefficients between each pair of ratings ranged from 0.057 to 0.736, and the average was only 0.411. These results suggest a wide divergence in the ESG rating results for Chinese firms. We suggest that information users need to consider a more diverse and comprehensive perspective when utilizing these ratings.

Investing for a better tomorrow: Values-driven antecedents of investment in socially responsible equity funds by Indian retail investors

Socially responsible investment (SRI) has recently gained major prominence for attaining sustainable development goals. While institutional investors have made remarkable efforts to mobilize resources toward socially responsible funds, retail investors remain apprehensive. Using the behavioral reasoning theory (BRT) framework, this study has examined the determinants of investment behavior in socially responsible equity funds (SREF) among Indian retail investors. A structured questionnaire was administered to 370 participants using a multi-stage stratified random sampling technique over 5 months starting June 2022. For data analysis, artificial neural network (ANN) and fuzzy set qualitative comparative analysis (fsQCA) complement the disjoint two-stage partial least square-structural equation modelling (PLS-SEM) approach to ensure the robustness of results and provide crucial practical insights. The result suggests that religious values shape investors' justifications for and against investment in SREF. “Reasons for” positively influence the global motives (attitude, subjective norms, and perceived behavioral control), whereas “reasons against” share a negative relationship with the attitude and perceived behavioral control. All global motives positively affect the intention towards investment in SREF, which in turn translates into actual investment behavior. The study provides theoretical insights to researchers and policy implications for corporations, fund managers, policymakers and regulators in light of the findings.

Does CSR Information Disclosure Improve Investment Efficiency? The Moderating Role of Analyst Attention

Since 2009, the China Securities Regulatory Commission has begun to require listed firms on the specified boards to disclose their corporate social responsibility and encouraged others to report corporate social responsibility voluntarily. Based on the data of domestic A-share listed companies from 2013 to 2019, this paper studies the relationship between corporate social responsibility information disclosure and corporate investment efficiency and the role of analysts in moderating the relationship. The empirical results show that the social responsibility information disclosed under China’s mandatory guidance has a positive effect on alleviating information asymmetry and improving investment efficiency, and this role becomes even more crucial when the external information environment fails to meet market demands. Overall, our findings suggest the important role of corporate social responsibility information disclosure in guiding investment behavior and improving investment efficiency, especially for those companies with low analyst attention. This article expands the research perspective on social responsibility information disclosure and investment efficiency. Furthermore, our research contributes to promoting corporate social responsibility and facilitating sustainable development.

Do peers’ negative earnings surprises Stifle corporate social responsibility?

This study examines the effects of rival firms' negative earnings surprises on focal firm's corporate social responsibility (CSR) investment. I theorize that rival firms' negative earnings surprises attract stronger scrutiny by shareholders in the focal firm, which exposes short-term pressure on the focal firm and makes it limit investments in socially responsible activities. I find that rival firms' negative earnings surprises decrease a firm's CSR engagement, and the effects are stronger when the focal firm has poorer financial performance, when market uncertainty is lower, and when rival firms that experience negative earnings surprises receive a greater amount of media coverage and more consistent news tone.

The role of socially responsible investors in environmental performance. An analysis of proactive and reactive practices

Society's concern for the environment requires a response from businesses. In recent years in Europe, several policies have been institutionally promoted to encourage socially responsible investments (SRI) at the corporate level, in terms of corporate environmental performance and disclosure, and at the level of capital markets. Investors are called to consider the environmental effects of their investments and can influence the environmental practices of companies. The research proposes that the volume, stability, and value of socially responsible investors (SRIs) could be determinant in companies' adoption of environmental measures.From a sample comprising 406 observations of European companies listed on the Dow Jones Sustainability Europe Index during a period of economic stability from 2015 to 2019, the extent to which stable and significant SRI determines companies’ adoption of environmental practices, both reactive—leading to reduction of the environmental footprint and effect—and proactive—tending to achieve clean energy and the recovery of the environment is studied.The results show that the value and stability of SRI positively affects companies’ proactive environmental practices, while the volume of SRI is negatively related to reactive environmental practices. In addition, the volatility of SRI is positively related to reactive environmental practices.The impact of SRI on proactive and reactive environmental practices shows their decisive role in companies taking proactive measures. At a time when European companies are required to strengthen their environmental commitments, the promotion of institutional practices that stimulate the presence and stability of SRI can favour the development of proactive practices, as opposed to reactive ones that could be an indirect indicator of a company's environmental risk.

Corporate social responsibility, brand value and corporate governance: new evidence from a 3SLS model

Purpose Taking a dynamic endogenous perspective, this study aims to examine neglected endogeneity issues in the relationship between corporate social responsibility (CSR) and brand value and the relationship’s moderation by corporate governance. Design/methodology/approach The study uses the three-stage least squares (3SLS) method on 990 samples of the 110 most valuable listed companies published by the World Brand Lab for 2013–2021 to empirically test the two-way interactive endogenous relationship between CSR and brand value. Findings The findings reveal that increasing investment in CSR increases brand value in the current period, which prompts companies to reduce investment in social responsibility, resulting in a decline in future brand value. Concerning the moderating effect of corporate governance variables, the size of the board of directors and the board’s proportion of independent directors positively regulate the relationship between CSR and brand value. By contrast, the proportion of executive shareholdings has a negative impact. Originality/value This study’s findings complement previous studies on endogeneity in the relationship between CSR and brand value, and enrich the literature on corporate governance, CSR and brand value as a whole. In addition, the study uses the 3SLS method, which avoids endogeneity problems and eliminates the one-sidedness of the subjective selection of instrumental variables.

Changing consumer attitudes to make the Corporate Social Responsibility investment in sustainable fish production, a worthwhile investment to corporates

AbstractThe need for environmental protection, especially of depleting natural resources such as fish stocks, remains a global challenge. Global population growth increases food consumption. Some socially responsible corporate entities in the fish sector are producing and selling sustainable fish products, but beyond meeting their altruistic motives, they need consumers to respond favorably to these CSR initiatives to make the investments worthwhile and to encourage more organizations to invest in CSR for sustainable development. This paper reports the findings of research on the factors which influence consumers in the emerging market of South Africa, to respond favorably to sustainable fish product CSR initiatives. A causal research design and quantitative method was employed with a sample of consumers who were part of the South African LinkedIn community and who eat fish, whether concerned or not about sustainability. An online questionnaire was developed using an extension of the Theory of Planned Behavior. Univariate, regression and mediation analyses were carried out. Attitude towards sustainable fish products was found to be the only significant predictor of intention to purchase sustainable fish but it was also found to mediate the impact of health consciousness and environment concern. This paper thus focuses specifically on the role of attitudes in sustainable fish consumption in South Africa. Recommendations are provided for improving these consumer responses so as to make these CSR investments worthwhile to corporates and thus also positively impact fish sustainability.

Implementing corporate sustainability information in socially responsible investing: a systematic review of empirical research

PurposeThis study aims to provide a precise understanding of how corporate sustainability information is used in socially responsible investing (SRI). The study is motivated by the lack of a recognised body of knowledge on this issue. This study, therefore, collates and reviews relevant studies (67 studies) to provide guidance to investors interested in SRI and identify a research agenda for academics desiring to contribute to this area.Design/methodology/approachThis study conducts a systemic literature review employing recognised key words and searching the Web of Science. HistCite is utilised to ensure important cited studies are not missed from the collection. The review was conducted from two perspectives: (1) sources of sustainability information and (2) how the information is used in SRI.FindingsThe review identifies five major sources of sustainability information, including corporate reports, ESG ratings, industry affiliation, news and private communication with firms. These sources of information play different roles in the cross section of SRI strategies (i.e. negative and positive screening, active ownership and integration). This study provides guidance on how to use this information in SRI and provides recommendations for future research on how analysts interact with the information, how different informational characteristics impact implementation, ways to improve data quality, improvements to analysis methods and where data use needs to be extended into new strategies.Originality/valueThis review contributes to the SRI literature by inventorying studies of an important, yet omitted aspect, namely, sustainability information. This work also enriches the literature on corporate sustainability information by investigating how this information can be used for a specific purpose, namely, SRI. Given the increasing interest in SRI, this review will provide much-needed guidance for a range of practitioners, including investors and regulators.

Looking at socially responsible investment strategies through the lenses of the global ETF industry

Environmental, Social, and Governance (ESG) ratings feature statistical and economic problems undermining their reliability as valid proxies for corporates’ social performance. To overcome this ratings providers specific bias, we focus on global sample of ESG-oriented Exchange Traded Funds (ETFs). Studying passive and pre-committed strategies provide us with several economic and econometric advantages, allowing us to document that Socially Responsible Investments (SRI)-oriented strategies generate significantly higher average stock market returns and liquidity. However, the identified overperformance is concentrated in months of extreme climate activity, while the effect reverses during financial crises. These findings confirm that investors react to non-pecuniary shocks by increasing the weights assigned to SRI investments in their portfolio, but their preference shifts back towards traditional strategies during economic downturns.

Former CEOs chairing the board: does it matter to corporate social and environmental investments?

Former CEOs who stay on the board as Chairmen (i.e., Chair-Former-CEO or CFCEO) often play a vital role in monitoring and advising the incumbent CEOs. However, their influence on firm performance remains under-investigated. This paper aims to offer new insights into the impact that such a role can have by examining corporate investment in social and environmental responsibility. It examines the effect of CFCEOs on the firm’s social and environmental responsibility of 1,263 S&P1500 firms from 2002 to 2021. We find that firms with the presence of a CFCEO exhibit superior social and environmental performance. This finding suggests that CFCEOs can encourage long-term value creation for a broader range of stakeholders by building social capital and public trust. Additional analyses reveal that the positive association between the CFCEO and firms’ social and environmental performance was more pronounced during the COVID-19 pandemic than during the global financial crisis of 2007-9.

Exclusion strategy in socially responsible investment: One size does not fit all

A better overlap between the exclusion set used by socially responsible investments (SRI) managers and individual preferences could lead to higher adoption of SRI, which is in turn expected to promote a more sustainable development. In the first study, we find an essential mismatch: both the US (n=472) and the UK (n=560) respondents did not adhere to the classification of some of the most commonly excluded sin industries as being sinful. In the second study on US investors (n=1020), we show that two-thirds of respondents are willing to pay 2.1% of their initial investment to choose which industries should be excluded. In comparison, the rest of the sample is willing to pay 2.5% to have a panel of experts decide for them. These results suggest the need to refine the exclusion strategies used by funds and update the list of industries typically excluded to promote SRI.

Ethics and Banking: Do Banks Divest Their Kind?

A growing group of institutional investors use divestment strategically to deter misconducts that are harmful for the climate and society. Based on Kantian ethics, we propose that divestment represents investors’ universal and absolute moral commitment to socially responsible investing (SRI). Following categorical and hypothetical imperatives and reciprocity as a norm, we hypothesize how institutional investors’ commit to SRI through a divestment strategy against ethically reprehensible behaviour of banks, especially when these investors represent banks themselves. Using a hand-collected database of the revelation dates of enforcement actions on banks, we find evidence that banks are less likely to divest equity holding on banks with misconduct (fined banks) than their non-bank institutional investors peers. Banks that commit to invest responsibly by signing for the Principles for Responsible Investment (PRI) are not significantly more likely to divest on fined banks stocks than non-signatory banks. Moreover, divestment of fined banks whose own legitimacy to operate is in question is not significantly different from non-fined banks divestment. We find that European banks are more inclined to sell their holdings permanently on fined banks than their United States peers. Therefore, bank’s moral commitment to SRI via divestments is influenced more by cultural and reciprocity norms than their moral commitment to participate in the PRI.

The Influence of ESG, SRI, Ethical, and Impact Investing Activities on Portfolio and Financial Performance—Bibliometric Analysis/Mapping and Clustering Analysis

This paper aims to examine the publication metrics of literature related to the influential aspects of ESG (environmental, social, and governance), SRI (socially responsible investing), ethical, and impact investing on the portfolio and financial performance literature. It also seeks to identify major patterns and core themes in this topic and draw lessons from the past literature for future directions. Data from the SCOPUS database were used in this study. The ‘biblioshiny’ R package, also known as ‘bibliometrix 3.0’, was employed to conduct bibliometric analysis, utilising mapping and clustering techniques on 260 articles, in order to distil the comprehensive knowledge and identify emerging trends in ESG, SRI, ethical, and impact investing. The thematic map classified the ESG, SRI, ethical, impact investing and performance relationship themes into four categories of themes: niche themes (SRI, engagement and ESG), motor themes (corporate financial performance, corporate social performance, ESG, ESG factors, sustainability, performance, integrated reporting, gender diversity, and board size), emerging or declining themes (social responsibility, environmental performance, socially responsible investment, ethical investment, and SRI), and basic or transversal themes (financial performance, corporate social performance, ESG performance, environmental, social, and governance). Socially responsible investing, engagement, and ESG imply a position between niche themes and a highly developed topic/emerging or a decreasing theme, while the impact of COVID-19 on sustainability and financial performance implies a position between a highly developed topic/emerging or decreasing theme and a basic theme. The findings contribute to the enhanced understanding of ESG, SRI, ethical, impact investing and performance, which are crucial for an efficient capital market in promoting sustainability and sustainable development. The study offers vital practical implications and future research directions.

The social determinants of CSR practice: Between headquarters policy and local mobilization

In this article we examine the social determinants of CSR practices by mining firms in the territories where they exploit resources. We argue that mining firms are caught between headquarters policy on CSR, and demands emanating from locally-based societal groups. Headquarters policy provides a process-based framework for engaging with stakeholders, a menu of favoured activities, and guidance on issues of global or home-country salience. But social mobilization explains the intensity of corporate social responsibility (CSR) investments and the timing of spending. We situate the analysis within the literature on the influence of social movements on policy implementation. The empirical evidence for the paper is based on a comparative case study of the influence of activists over corporate social responsibility policy and practice in the mining sector in Chile and Argentina, using both secondary sources and primary field research.

Investor preferences, financial literacy and intermediary choice towards sustainability

Based on a large and representative sample of Italian adults, our study aims to detect the determinants of retail investor preferences for socially responsible (SR) financial intermediaries, i.e., intermediaries adopting environmental, social and governance strategies and offering both traditional and SR financial products. We demonstrate that SR financial intermediaries are chosen by individuals characterized by high self-reported orientation towards SR investments and high financial literacy. Disaggregating financial literacy into its three determinants, we show that the higher the financial knowledge and the more correct financial behavior of retail investors related to savings and financial control, the higher their preference for SR financial intermediaries. On the other hand, individual financial attitude towards savings and spending displays a negative relationship with this preference. Moreover, retail investors with more specific knowledge about portfolio diversification choose more SR financial intermediaries than other people.

The performance of socially responsible investments: A meta‐analysis

AbstractIn this article, we use a meta‐analysis to examine the performance of socially responsible investing (SRI). We find that, on average, SRI neither outperforms nor underperforms the market portfolio. However, in line with modern portfolio theory, we find that global SRI portfolios outperform regional subportfolios. Moreover, high‐quality publications, publications in finance journals and authors who publish more frequently on SRI are all less likely to report SRI outperformance. In particular, we find that including more factors in a capital market model reduces the likelihood that a study will find SRI outperformance.

Under rising environmental uncertainty Chinese enterprises pursue fame or profits? Evidence from corporate social responsibility and financial investment

PurposeThe purpose of this study is to evaluate the impact of environmental uncertainty on corporate social responsibility (CSR), and involves corporate financial investment as mediating factor into this relationship to identify whether Chinese enterprises pursue fame or profit under rising environmental uncertainty.Design/methodology/approachData of listed companies in China from 2010 to 2019 are employed. Fixed effect and mediating effect models were used to explore the relationship between environmental uncertainty, corporate financial investment, and CSR. The heterogeneity influence and moderating effect are discussed by using the method of grouping test and adding interactive items.FindingsThe study finds that rising environmental uncertainty has a negative impact on CSR. It stimulates managements' short-sighted motivation, so that enterprises prioritize financial investment that can solve short-term goals, rather than CSR performance. This inhibitory effect is caused by holding illiquid financial assets with the motivation of “speculative profit seeking.” The negative effect is greater in the samples of state-owned enterprises, nonfamily enterprises and enterprises with low risk-taking.Practical implicationsIt provides a decision-making direction for implementation of CSR governance and the construction of CSR system, particularly in emerging market economies.Social implicationsCSR is widely known in developed countries for its formation, development and role, but its effectiveness and behavioral motivation are less mentioned in emerging markets. In the future, the research in this area needs to be further advanced.Originality/valueThe study makes significant contributions to the mechanisms behind the link between environmental uncertainty and CSR by taking corporate financial investment as an intermediary factor into the analysis, especially in the unique market context of China.

How does social responsibility investment strategy contribute to hospitality firms’ recovery from public health emergencies? The case of COVID-19 pandemic

Using fuzzy-set qualitative comparative analysis, this paper explores which configurations of six dimensions of hospitality firms’ corporate social responsibility (CSR) result in higher (or lower) levels of total factor productivity. We demonstrate that different categories of stakeholders and hospitality firms’ dynamic capabilities complement each other under the framework of configurational theory. The result shows that: 1) The CSR dimensions of product quality, CSR communication, and environmental protection are critical to high levels of firm performance; 2) After the pandemic, hospitality firms should make investment in CSR communication and environmental protection a priority; 3) Hospitality firms’ choice to invest in a specific combination of dimensions of CSR practice should depend on their overall level of corporate governance (high or low). This paper contributes to the strategic management and corporate governance literature by identifying the role of hospitality firms’ governance on the linkage between CSR investment strategy and firm performance.