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1 – 10 of 102Amisha Gupta and Shumalini Goswami
The study examines the impact of behavioral biases, such as herd behavior, overconfidence and reactions to ESG News, on Socially Responsible Investing (SRI) decisions in the…
Abstract
Purpose
The study examines the impact of behavioral biases, such as herd behavior, overconfidence and reactions to ESG News, on Socially Responsible Investing (SRI) decisions in the Indian context. Additionally, it explores gender differences in SRI decisions, thereby deepening the understanding of the factors shaping SRI choices and their implications for sustainable finance and gender-inclusive investment strategies.
Design/methodology/approach
The study employs Bayesian linear regression to analyze the impact of behavioral biases on SRI decisions among Indian investors since it accommodates uncertainties and integrates prior knowledge into the analysis. Posterior distributions are determined using the Markov chain Monte Carlo technique, ensuring robust and reliable results.
Findings
The presence of behavioral biases presents challenges and opportunities in the financial sector, hindering investors’ SRI engagement but offering valuable opportunities for targeted interventions. Peer advice and hot stocks strongly predict SRI engagement, indicating external influences. Investors reacting to extreme ESG events increasingly integrate sustainability into investment decisions. Gender differences reveal a greater inclination of women towards SRI in India.
Research limitations/implications
The sample size was relatively small and restricted to a specific geographic region, which may limit the generalizability of the findings to other areas. While efforts were made to select a diverse sample, the results may represent something different than the broader population. The research focused solely on individual investors and did not consider the perspectives of institutional investors or other stakeholders in the SRI industry.
Practical implications
The study's practical implications are twofold. First, knowing how behavioral biases, such as herd behavior, overconfidence, and reactions to ESG news, affect SRI decisions can help investors and managers make better and more sustainable investment decisions. To reduce biases and encourage responsible investing, strategies might be created. In addition, the discovery of gender differences in SRI decisions, with women showing a stronger propensity, emphasizes the need for targeted marketing and communication strategies to promote more engagement in sustainable finance. These implications provide valuable insights for investors, managers, and policymakers seeking to advance sustainable investment practices.
Social implications
The study has important social implications. It offers insights into the factors influencing individuals' SRI decisions, contributing to greater awareness and responsible investment practices. The gender disparities found in the study serve as a reminder of the importance of inclusivity in sustainable finance to promote balanced and equitable participation. Addressing these disparities can empower individuals of both genders to contribute to positive social and environmental change. Overall, the study encourages responsible investing and has a beneficial social impact by working towards a more sustainable and socially conscious financial system.
Originality/value
This study addresses a significant research gap by employing Bayesian linear regression method to examine the impact of behavioral biases on SRI decisions thereby offering more meaningful results compared to conventional frequentist estimation. Furthermore, the integration of behavioral finance with sustainable finance offers novel perspectives, contributing to the understanding of investors, investment managers, and policymakers, therefore, catalyzing responsible capital allocation. The study's exploration of gender dynamics adds a new dimension to the existing research on SRI and behavioral finance.
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Keywords
- Behavioral finance
- SRI
- ESG
- Sustainable finance
- Behavioral biases
- Asian financial markets
- G40 behavioral finance: general
- G11 portfolio choice; investment decisions
- C11 Bayesian analysis: general
- O44 environment and growth
- Q01 sustainable development
- Bayesian analysis (C11)
- Portfolio Choice; Investment Decisions (G11)
- Behavioral Finance: General (G40)
- Environment and Growth (O44)
- Sustainable Development (Q01)
Mauro Sciarelli, Silvia Cosimato, Giovanni Landi and Francesca Iandolo
Recently, socially and responsible investments (SRI) have constantly grown becoming a highly discussed issue. Therefore, the main purpose of this paper is to better understand if…
Abstract
Purpose
Recently, socially and responsible investments (SRI) have constantly grown becoming a highly discussed issue. Therefore, the main purpose of this paper is to better understand if environmental social governance (ESG) criteria integration in investment strategies can support the transition of finance toward a more sustainable growth.
Design/methodology/approach
An explorative analysis based on a multiple case study has been conducted and addressed by a content analysis on the Key Investors Information Documents (KIIDs) that the sample companies published for 2020.
Findings
The achieved results demonstrated that the case companies differently integrated ESG into their SRI; thus, if some of them are quite near to a full integration, the others demonstrated less than a full commitment with ESG. This seems to be mainly due to the different approach that asset management companies (AMCs) and/or managers have adopted for integrating ESG criteria.
Research limitations/implications
Even though the achieved results offered some interesting insights for asset managers, the explorative and qualitative nature of this study and the small sample investigated somewhat limits it.
Practical implications
AMCs, consultants and managers in developing and implementing their SRI strategy could be much more focused on the importance of ESG integration for the transition toward a more responsible and sustainable finance (micro-level) as well as a more sustainable development (macro-level).
Originality/value
The paper provides new insights into the essence of SRI strategies and their potential to contribute to sustainable development. Thus, it tries to shed new lights on the role that ESG can have to stimulate and support investment decisions and, in so doing, contributing to make finance grow more sustainable.
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The purpose of this paper is to examine socially responsible investment (SRI) fund performance and investigate the factors influencing fund performance.
Abstract
Purpose
The purpose of this paper is to examine socially responsible investment (SRI) fund performance and investigate the factors influencing fund performance.
Design/methodology/approach
The study uses return data from the Morningstar database for 152 SRI funds from January 1995 to May 2015. The initial analysis includes the use of various risk-adjusted performance measures, including Sharpe ratio, Treynor ratio, Information ratio, Sortino ratio and M2. The study also uses four factor models, including Jensen single-factor model, Fama–French three-factor model, Carhart four-factor model and Fama–French five-factor model to explain SRI fund returns. Finally, a cross-sectional regression analysis is applied to investigate the determinants of SRI fund returns.
Findings
The results show that, on average, the SRI funds provide comparable risk-adjusted returns relative to various benchmark market indices. Market factor is significant in explaining SRI fund returns. Examining each factor model, the results do not support Fama–French’s three-factor model as neither size nor value factor is significant. The author finds weak support for Carhart’s momentum factor along with the market factor. Finally, the Fama–French five-factor model shows market, size and operating profit factors explain SRI fund returns. The study also finds the fund performance is stronger for funds with the higher turnover ratio, the larger fund size and more managerial experience and lower for funds with higher expense ratio. Also, funds formed with negative screening perform better than positive or mixed screened funds.
Originality/value
SRI funds have received considerable attention from investors. This study contributes to the literature by examining SRI fund performance and investigating factors influencing their performance using multiple factor models and cross-sectional regression analysis. The findings are relevant for investors who demand responsible investment opportunities without sacrificing returns for nonfinancial screenings. Findings also suggest that investors should consider fund characteristics when selecting SRI funds.
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The purpose of this paper is to examine the performance of portfolios that are constructed based on environmental, social and governance (ESG) scores and consist of stocks located…
Abstract
Purpose
The purpose of this paper is to examine the performance of portfolios that are constructed based on environmental, social and governance (ESG) scores and consist of stocks located in Europe and Turkey.
Design/methodology/approach
In order to form the portfolios, firstly all stocks are ranked in a descending way based on ESG-based (ESG, environmental, social and governance) scores, separately. Then, 10% of stocks with the highest scores are included in the “Top” portfolio and 10% of stocks with the lowest scores are included in “Bottom” portfolio and totally performance of eight portfolios are investigated. Finally, capital asset pricing model (CAPM) and Fama-French three-factor model are employed as performance measurement benchmarks.
Findings
Results obtained from CAPM regression show that using ESG-based scores two portfolios underperform the market index. The results of the three-factor model provide that performances of Bottom ESG and Bottom GOV portfolios outperform the market excess return by 0.57% and 0.53%. The overall findings of this paper indicate that there is no relationship between socially responsible investment (SRI) and portfolio performance. These findings are in line with the efficient market hypothesis which indicates all information is reflected in prices.
Originality/value
The aim of the study is to provide insight on the question of “whether SRI has any effect on the portfolio performance”. As far as the literature review is concerned it is seen that this study provide additional insight by utilizing a longer time span together with data from numerous markets.
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Syed Marwan and Mohamed Aslam Haneef
The purpose of this paper is to examine the world’s first social impact bond (SIB) and the lessons that can be learned for the Islamic finance industry to fulfil its true…
Abstract
Purpose
The purpose of this paper is to examine the world’s first social impact bond (SIB) and the lessons that can be learned for the Islamic finance industry to fulfil its true objectives.
Design/methodology/approach
The Peterborough SIB was recently announced to be successful in achieving its targeted social and investment outcomes, reducing recidivism by 9 per cent and paying back investors a 3 per cent pa return. The paper compares Peterborough SIB with socially responsible investment (SRI) sukuk in terms of form and substance, and finds that there are various lessons from the Peterborough SIB that can be useful for future development of Islamic financial products.
Findings
Innovative social financial tools such as SIB exemplify the true spirit of risk sharing and social responsibility, which is arguably missing in current practices of the Islamic finance industry. With the growing interest towards SRI strategies and increase in socially motivated investors, such financial tools may not only help the sustainable growth of the Islamic finance industry, but also fill in the gap between its theory and practice.
Practical implications
As such, the paper also proposes a social impact sukuk model which integrates the key aspects learned from Peterborough SIB. This includes prioritising social impact, measurable success indicators, data and management systems, flexible contracts, third sector integration, risk sharing and fostering the culture of innovation.
Originality/value
The findings can offer some practical insights in dealing with the issue of Islamic finance practice being overly concerned with its formal adherence with Islamic legal rules whilst neglecting its true fundamental values.
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The study aims to identify the trends in the scholarly works on investors preference toward sustainable investments by synthesizing their knowledge structures.
Abstract
Purpose
The study aims to identify the trends in the scholarly works on investors preference toward sustainable investments by synthesizing their knowledge structures.
Design/methodology/approach
A systematic search approach using PRISMA protocol on the Scopus database was used to generate a sample of 403 publications for the purpose of bibliometric analysis. The study performed a range of analyses, including three-field plot analysis, thematic mapping and cluster analysis using the VOSviewer and Biblioshiny software.
Findings
The key findings comprise the identification of four clusters within the subject, namely, corporate social responsibility and environmental, social and governance (ESG) investing, ethical investing, green finance and socially responsible investments. This study offers a clear picture of the publishing advancement and research diversification of four selected clusters' research themes, and cluster subthemes.
Practical implications
The research reveals the social and intellectual structure of the field, which provides the future researchers an insights into emerging themes and provides them opportunities for collaboration as well. The outcomes of the research hold significance for policymakers, governing bodies, aspiring scholars, advocates for the environment and investors. It offers an insightful framework for implementing sustainable practices, balancing profits, and environmental risks and creating value from environmentally conscious research and practice.
Originality/value
The future direction and extensiveness of research work have been explored using the themes generated. To the best of the authors’ knowledge, this study, which combines the VOSviewer and Biblioshiny tools, is likely the first attempt to provide a thorough bibliometric analysis in the research sphere of investors preferences toward sustainable investments.
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Sivakumar Velayutham and Rashedul Hasan
The purpose of this paper is to critically discuss the participation of sovereign wealth funds (SWFs) in the corporate social responsibility (CSR) programmes. Sovereign wealth…
Abstract
Purpose
The purpose of this paper is to critically discuss the participation of sovereign wealth funds (SWFs) in the corporate social responsibility (CSR) programmes. Sovereign wealth funds in emerging economies are often involved in corporate social responsibility. However, the 1 Malaysian Development Berhad (1MDB) scandal illustrates the possible use of SWF as a vehicle for corruption and abuse.
Design/methodology/approach
The primary objective is to develop good governance practices of CSR by SWFs that could limit corrupt practices. A case study approach is adopted to investigate the CSR involvement of two SWFs – Norway’s Government Pension Fund Global (GPFG) and Abu Dhabi Fund for Development (ADFD).
Findings
The finding shows that SWFs should not be directly involved in CSR. It is proposed that independent Non-government Organisations (NGOs), through a competitive funding model, could serve the CSR purpose of SWFs more effectively and bring socio-economic changes in emerging economies.
Originality/value
The funding model identifies the expected outcomes, priorities and uses of the funds. The funding committee should also be independent of the Board and transparent in its allocations.
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The purpose of this paper is to offer a new and more elaborate view of the relationship between information and knowledge in accountability settings.
Abstract
Purpose
The purpose of this paper is to offer a new and more elaborate view of the relationship between information and knowledge in accountability settings.
Design/methodology/approach
The study investigates how knowledge is accomplished when accountability is demanded. The “knowing-in-practice” perspective (Lave, 1988; Orlikowski, 2002; Pentland, 1992) is introduced to theorise knowledge as the ability to purposefully go on with practice and information as a resource that may contribute to this knowledge. Empirically, the study investigates Nordic investors’ engagement with companies addressing environmental, social, and governance issues.
Findings
The findings illustrate how information may contribute to knowledge in an accountability setting. Whether or not the information contributes to knowledge in the accountability setting depends on the information’s origin, convergence with other accounts, and use in contradicting and disproving executives’ information. The analysis also shows how knowledge in accountability settings may be achieved without information – for example, by enacting theories.
Research limitations/implications
The study suggests that research should more carefully distinguish between knowledge and information. According to the perspective used here, knowledge is the ability to purposefully go on with practice. Information is one of many resources that can contribute to knowledge.
Practical implications
This study provides insight into the relationship between accounting systems and the practice of demanding accountability. Such understanding is valuable when designing accounts-based governance and civil regulation, such as for addressing sustainability issues, as in this study.
Originality/value
The study challenges the view of knowledge as a representation or factual commodity, and provides a new and more elaborate view of the relationship between information and knowledge in accountability settings by introducing the knowing-in-practice perspective to the accounting literature.
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Md. Bokhtiar Hasan, Md Mamunur Rashid, Md. Naiem Hossain, Mir Mahmudur Rahman and Md. Ruhul Amin
This research explores the spillovers and portfolio implications for green bonds and environmental, social and governance (ESG) assets in the context of the rapidly expanding…
Abstract
Purpose
This research explores the spillovers and portfolio implications for green bonds and environmental, social and governance (ESG) assets in the context of the rapidly expanding trend in green finance investments and the need for a green recovery in the post-COVID-19 era.
Design/methodology/approach
This study utilizes Diebold and Yilmaz’s (2014) spillover method and portfolio strategies (hedge ratio, optimal weights and hedging effectiveness) for the data starting from February 29, 2012, to March 14, 2022.
Findings
The study’s findings reveal that the lower volatility spillover is evidenced between the green bonds and ESG stocks during tranquil and turbulent periods (e.g. COVID-19 and Russia-Ukraine War). Furthermore, hedging costs are lower both in normal times and during economic slumps. Investing the bulk of the funds in green bonds makes it possible to achieve maximum hedging effectiveness between the S&P green bond (GB) and the S&P 500 ESG.
Practical implications
Both investors and policymakers may use these findings to make wise investment and policy choices to achieve post-COVID environmental sustainability.
Originality/value
Unlike previous research, this is the first to explore the interconnectedness among the major global and country-specific green bonds and ESG assets. The major findings of this study about the lower volatility spillovers and hedging costs between green bonds and ESG assets during the tranquil and turbulent periods may contribute to the post-COVID investment portfolio for environmental sustainability.
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Bashir Tijjani, Murtaza Ashiq, Nadeem Siddique, Muhammad Ajmal Khan and Aamir Rasul
The purpose of this study is to provide quantitative information on the growth of Islamic finance literature. The study focused on publishing trends, countries producing research…
Abstract
Purpose
The purpose of this study is to provide quantitative information on the growth of Islamic finance literature. The study focused on publishing trends, countries producing research on Islamic finance, key authors, major contributing organizations, authorship patterns, keywords and articles with the highest citations.
Design/methodology/approach
Bibliometric analysis is applied to analyse the growth and publishing trends in Islamic finance literature. The Web of Science (WoS) database was used to extract bibliometric data covering the period 1939–2019 for Islamic finance literature.
Findings
The study finds that Islamic finance research has gained remarkable momentum in the literature. However, such growth is largely manifested in Malaysia because of a conducive atmosphere for this type of research. Interestingly, the study finds that the three most productive journals are located in the UK and Malaysia, while Professor M. Kabir Hassan from the University of New Orleans, the USA appears to head the list of authors with 23 publications on Islamic finance.
Practical implications
This study provides up-to-date literature on the current state of Islamic finance in the world; as a result, it supports the development of policies by the Islamic finance industry. The findings of the study also serve as a reference point for Islamic finance training and educational institutions.
Originality/value
Islamic finance is an emerging financial discipline; as such, there is a need for more awareness of this financial system in the world. Muslim-majority countries, especially Saudi Arabia, Turkey, Indonesia, the United Arab Emirates (UAE), Pakistan and Bahrain, have to include Islamic finance in their curriculum and establish research institutions and research journals. In addition, Arabic language journals should be indexed in WoS and/or Scopus to provide a high-quality publication platform. This study provides a more comprehensive bibliometric analysis on the growth of Islamic finance literature (1939–2019) in the WoS database; most of the prior studies have covered relatively few areas of focus and a lower range of years in some cases.
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