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Article
Publication date: 17 July 2023

Dan Daugaard, Jing Jia and Zhongtian Li

This 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…

Abstract

Purpose

This 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/approach

This 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.

Findings

The 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/value

This 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.

Article
Publication date: 4 July 2023

Maria Elisabete Duarte Neves, Maria do Castelo Gouveia, Adriana Martins and Joaquim Carlos da Costa Pinho

The main goal of this paper is better understand the risk/return trade-off of investing in socially responsible investment funds (SRIF) and green investment funds (GIF).

Abstract

Purpose

The main goal of this paper is better understand the risk/return trade-off of investing in socially responsible investment funds (SRIF) and green investment funds (GIF).

Design/methodology/approach

To achieve our aim a green investment fund portfolio, a socially responsible investment portfolio and a conventional fund (CF) portfolio from the United States of America (USA) were selected to compare the efficiency of these three different portfolios, by using Value-Based Data Envelopment Analysis (DEA) methodology.

Findings

The results point out that SRIF and GIF are more efficient than CF. For five years, the CFs have not outperformed the GIF.

Originality/value

The results suggest that there is a growing awareness on the part of investors that sustainable companies are the companies that will allow a better quality of life and a more sustainable environment. It seems that somehow managers and investors are aware that the market will compensate them for thinking about a cleaner and more equitable world.

Details

Journal of Economic Studies, vol. 51 no. 2
Type: Research Article
ISSN: 0144-3585

Keywords

Article
Publication date: 26 May 2023

Neha Seth and Deepti Singh

This paper aims to provide a bibliometric review and visualisation analysis of the literature on Sustainable Stock Indices (SSI) between January 2001 and March 2022. The purpose…

Abstract

Purpose

This paper aims to provide a bibliometric review and visualisation analysis of the literature on Sustainable Stock Indices (SSI) between January 2001 and March 2022. The purpose of performing this bibliometric analysis is to empirically report the trend, intellectual structure, knowledge development directions and identify prospective research topics in the area of SSI.

Design/methodology/approach

A total of 222 publications were selected after evaluating, identifying and synthesising the extensive publications using the Preferred Reporting Items for the Systematic Reviews and Meta-Analyses (PRISMA) approach. The articles were extracted from the databases of SCOPUS, Web of Science and Google Scholar. The study uses VOSviewer and RStudio software to answer four research questions.

Findings

The results signify that there has been a considerable increase in the level of research considering SSI. Further, the study shows that SSI is among the top five trending keywords in the research related to finance and environment. Most papers considered as a sample for this study are based on Dow Jones Sustainable Indices. Noteworthy, very few economies are participating in this research domain, and the significant contribution is from the developed countries.

Practical implications

The present review paper may assist the researchers in identifying the trending research topics in this domain. It may serve as a roadmap for several further studies in the area.

Originality/value

This study is unique in terms of reviewing the literature based on SSI. Further, it provides a holistic view of the current trend, global position and research hotspots of SSI, which has important implications for future research.

Details

Qualitative Research in Financial Markets, vol. 16 no. 2
Type: Research Article
ISSN: 1755-4179

Keywords

Article
Publication date: 22 March 2024

Rachana Jaiswal, Shashank Gupta and Aviral Kumar Tiwari

Grounded in the stakeholder theory and signaling theory, this study aims to broaden the research agenda on environmental, social and governance (ESG) investing by uncovering…

Abstract

Purpose

Grounded in the stakeholder theory and signaling theory, this study aims to broaden the research agenda on environmental, social and governance (ESG) investing by uncovering public sentiments and key themes using Twitter data spanning from 2009 to 2022.

Design/methodology/approach

Using various machine learning models for text tonality analysis and topic modeling, this research scrutinizes 1,842,985 Twitter texts to extract prevalent ESG investing trends and gauge their sentiment.

Findings

Gibbs Sampling Dirichlet Multinomial Mixture emerges as the optimal topic modeling method, unveiling significant topics such as “Physical risk of climate change,” “Employee Health, Safety and well-being” and “Water management and Scarcity.” RoBERTa, an attention-based model, outperforms other machine learning models in sentiment analysis, revealing a predominantly positive shift in public sentiment toward ESG investing over the past five years.

Research limitations/implications

This study establishes a framework for sentiment analysis and topic modeling on alternative data, offering a foundation for future research. Prospective studies can enhance insights by incorporating data from additional social media platforms like LinkedIn and Facebook.

Practical implications

Leveraging unstructured data on ESG from platforms like Twitter provides a novel avenue to capture company-related information, supplementing traditional self-reported sustainability disclosures. This approach opens new possibilities for understanding a company’s ESG standing.

Social implications

By shedding light on public perceptions of ESG investing, this research uncovers influential factors that often elude traditional corporate reporting. The findings empower both investors and the general public, aiding managers in refining ESG and management strategies.

Originality/value

This study marks a groundbreaking contribution to scholarly exploration, to the best of the authors’ knowledge, by being the first to analyze unstructured Twitter data in the context of ESG investing, offering unique insights and advancing the understanding of this emerging field.

Details

Management Research Review, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2040-8269

Keywords

Article
Publication date: 8 March 2024

Said Elfakhani

This study aims to test mutual fund superiority, comparing the performance of 646 Islamic mutual funds with 475 ethical funds and conventional proxies.

Abstract

Purpose

This study aims to test mutual fund superiority, comparing the performance of 646 Islamic mutual funds with 475 ethical funds and conventional proxies.

Design/methodology/approach

This study uses statistical methods including paired t-statistics of independent samples, one-way Bonferroni test–analysis of variance–F-statistic for testing means equality, the chi-squared test for median equality and regression models corrected for heteroscedasticity. These methods are used to identify superiority of mutual funds and to validate the significance of the results.

Findings

The findings confirm the superiority of conventional funds over ethical funds and ethical funds over Islamic funds. Both ethical and Islamic funds, however, outperform conventional proxies during some recessionary periods. Moreover, stronger performance is recorded for Islamic funds in Europe and North America regions and across age and asset allocation categories, but limited support for reversal fund size, composition focus and reversed price effect.

Research limitations/implications

These findings should assist investors when deciding to invest and motivate Islamic and ethical funds to improve their portfolio formation and asset allocation strategies set by their professional managers.

Originality/value

The originality of this study is in its comprehensive approach in that it compares the performance of funds after accounting for such characteristics as fund objectives, size, age, asset allocation, geographical investment focus, fund composition focus, share price levels and the effect of global crises. This study approach is not only original and productive in documenting Islamic funds’ performance for the past three decades (1990–2022) but can also update the literature on these characteristics collectively and individually.

Details

Journal of Islamic Accounting and Business Research, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1759-0817

Keywords

Article
Publication date: 29 March 2024

Waleed Hemdan and Jian Zhang

This study investigates how to motivate behavioral intentions toward green investment (BIGI) with the moderating effect of social media platforms usage (SMPU) among individual…

Abstract

Purpose

This study investigates how to motivate behavioral intentions toward green investment (BIGI) with the moderating effect of social media platforms usage (SMPU) among individual investors in Egypt.

Design/methodology/approach

The study used partial least squares structural equation modeling (PLS-SEM) to analyze the data and test hypotheses based on a sample of 550 individual investors with investment experience.

Findings

The results show that attitude, subjective norm (SN), and perceived behavioral control (PBC) have a significant relationship with investors' behavioral intention toward green investment. The moderating effect of (SMPU) supported the relationship between (SN), (PBC), and (BIGI), but (SMPU) does not support the relationship between attitude and (BIGI).

Practical implications

This study provides some implications for investment providers, service providers, and policymakers.

Originality/value

Despite the increasing global interest in climate change and its consequent opportunities and challenges for business, previous studies did not strongly emphasize green investment. So, based on the theory of planned behavior (TPB), this study sheds light on the motivational factors that may push investors' behavioral intentions toward green investment. With the increasing interest in digital transformation, the study also examined how digital platforms support (BIGI), especially in Egypt as a developing country.

Details

International Journal of Emerging Markets, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1746-8809

Keywords

Article
Publication date: 23 January 2024

Hugo Alvarez-Perez, Regina Diaz-Crespo and Luis Gutierrez-Fernandez

This study aims to examine the performance of environmental, social and governance (ESG) equity indices in Latin America (LA), evaluating their risk-return characteristics in…

Abstract

Purpose

This study aims to examine the performance of environmental, social and governance (ESG) equity indices in Latin America (LA), evaluating their risk-return characteristics in comparison to conventional benchmark indices.

Design/methodology/approach

Using a quantitative empirical approach, the authors analyze ESG equity indices from Brazil, Mexico, Chile, Peru and Colombia, employing metrics such as Sharpe, Sortino and Omega ratios to measure risk-adjusted returns. Regression analysis is employed to assess the replicability of ESG indices by benchmark indices. Monte Carlo simulations are conducted to explore the potential increase in risk-adjusted returns when ESG equity indices are incorporated into portfolios.

Findings

The study addresses critical questions for investors: Can ESG indices outperform their benchmarks? Can these ESG indices be replicated by benchmark counterparts? Do ESG equity indices enhance portfolio diversification? The findings reveal that investing in ESG indices has the potential to enhance risk-adjusted returns and portfolio diversification.

Research limitations/implications

While this study focuses on various LA economies, it’s important to note variations in currency and volatility.

Practical implications

For investors in LA, this study highlights the importance of considering ESG indices as part of their investment strategies. While not all ESG indices outperform conventional ones, some may improve diversification and risk-adjusted performance. Investors should carefully assess market-specific conditions and national factors when making investment decisions.

Originality/value

The primary contribution of this study is its focus on LA countries in the examination of diverse portfolios. The research provides valuable insights into the performance of ESG indices in this region compared to conventional benchmark indices. This approach addresses an important gap in the existing literature and offers a more comprehensive perspective on ESG investing and portfolio diversification.

Propósito

Se examina el rendimiento de los índices-ESG en América Latina (AL), evaluando sus características de riesgo y retorno en comparación con los índices convencionales.

Diseño/metodología/enfoque:

Utilizando un enfoque cuantitativo, analizamos los índices-ESG de Brasil, México, Chile, Perú y Colombia, empleando ratios de Sharpe, Sortino y Omega para medir los rendimientos ajustados al riesgo. Se utiliza análisis de regresión para evaluar la replicabilidad de los índices-ESG por parte de los índices de referencia. Se realizan simulaciones de Monte-Carlo para explorar el aumento en los rendimientos ajustados al riesgo cuando se incorporan los índices-ESG en las carteras.

Hallazgos:

El estudio aborda preguntas críticas: ¿Pueden los índices-ESG superar a sus índices de referencia? ¿Pueden estos índices-ESG ser replicados por sus contrapartes de referencia? ¿Mejoran los índices-ESG la diversificación de las carteras? Los hallazgos revelan que la inversión en índices-ESG tiene el potential de mejorar los rendimientos y la diversificación de las carteras de inversión.

Limitaciones/implicaciones de la investigación –

Aunque este estudio se centra en diversas economías de AL, es importante tener en cuenta variaciones en moneda y volatilidad.

Originalidad/valor:

La principal contribución de este estudio radica en su enfoque en países de AL en el examen de carteras diversas; ofrece valiosos conocimientos sobre el rendimiento de los índices-ESG en esta región en comparación con los índices convencionales.

Article
Publication date: 24 October 2023

Santushti Gupta and Divya Aggarwal

This study aims to empirically examine environment, social, and governance (ESG) as an effective strategy to reduce major impediments for a corporation in the form of costs of…

Abstract

Purpose

This study aims to empirically examine environment, social, and governance (ESG) as an effective strategy to reduce major impediments for a corporation in the form of costs of capital (COC) and systematic risk, especially for emerging markets such as India.

Design/methodology/approach

A sample of 114 Indian firms from eight prominent industries based on Thomson Reuters classification (TRBC) are used in the study. A panel regression with industry-fixed effects is carried out to account for industry heterogeneity. For robustness, the authors also carry out a matched sample analysis.

Findings

The authors observe a negative and significant relationship between ESG performance with COC and systematic risk, respectively. For the pillar-wise analysis, the authors observe that only governance performance is negatively and significantly related to COC whereas the environmental and social performances are negative and insignificant. For ESG pillar level analysis for beta, the authors observe that all pillars are negative and significant, thus making a case for how firms can fine-tune their ESG strategies according to each pillar.

Research limitations/implications

As the ESG concept is still in a very nascent stage, data availability is a definite challenge in India.

Practical implications

As ESG is increasingly becoming relevant for multiple stakeholders, this study aims to provide evidence that can potentially guide the regulators, practitioners, and academicians to address the contemporary needs of these stakeholders, while also doing good for the firm in the traditional sense.

Social implications

The transition to a sustainable economy is a challenge for emerging economies, especially for a country like India where stakeholders are not only varied but also huge in number. With this study's contribution towards an incremental understanding of ESG, Indian regulators and policymakers can bring forward mandates as to ESG compliances that are rewarding for the firms and give them enough impetus towards complying with ESG norms.

Originality/value

The extant literature on ESG majorly discusses the relationship between ESG performance and financial performance. This study addresses the lacuna of the relationship of ESG with COC and beta in the Indian context.

Details

Asian Review of Accounting, vol. 32 no. 2
Type: Research Article
ISSN: 1321-7348

Keywords

Article
Publication date: 8 November 2023

Shavneet Sharma and Gurmeet Singh

Plastic pollution is a major issue that plagues modern society. Scholars are interested in comprehending consumers’ behavioural actions to address plastic pollution. This study…

Abstract

Purpose

Plastic pollution is a major issue that plagues modern society. Scholars are interested in comprehending consumers’ behavioural actions to address plastic pollution. This study aims to delve into the determinants of consumers’ engagement with social media as a medium to address plastic pollution.

Design/methodology/approach

A conceptual model is developed that extends the behavioural reasoning theory (BRT). Using a quantitative approach, 476 responses underwent structural equation modelling analysis.

Findings

Results indicate that “reasons for” positively correlate with attitude and intention towards socially responsible engagement. Contrarily, “Reasons against” demonstrated a positive association with socially responsible engagement intention. Attitudes favouring socially responsible engagement correlate positively with the underlying intention. The moderation analysis underscores the positive relation of social return on social media with consumers’ attitude and their “reasons for” leaning towards socially responsible engagement intention. Notably, a positive connection was established between socially responsible engagement intention and the trifecta of consumption, contribution and content creation behaviours.

Originality/value

By enhancing the BRT, this research sheds light on novel perspectives regarding consumers’ engagement on social media platforms. Distinctively, it is among the handful of studies probing the influence of behavioural intention across diverse behavioural outcomes. The insights gained from this study, grounded in empirical evidence from an emerging market, are poised to guide policymakers, governmental agencies and industry practitioners in formulating effective strategies to combat plastic pollution. Additionally, the study can assist in achieving the UN sustainable development goals (SDGs), specifically SGD 12, SGD 13, SDG 14 and SGD 17.

Details

Social Responsibility Journal, vol. 20 no. 5
Type: Research Article
ISSN: 1747-1117

Keywords

Article
Publication date: 11 July 2023

Patrick Velte

This paper aims to review empirical research on the relationship between institutional ownership (IO) and board governance (85 studies).

Abstract

Purpose

This paper aims to review empirical research on the relationship between institutional ownership (IO) and board governance (85 studies).

Design/methodology/approach

Based on agency and upper echelons theory, the heterogeneous monitoring function of specific types and the nature of institutional investors on board composition, compensation and chief executive officer (CEO) characteristics will be focused.

Findings

The author found that most studies have referred to archival studies, analyzed the impact of board governance on IO, focused on CEO characteristics, neglected IO heterogeneity and advanced regression models to address endogeneity concerns. In line with the theoretical framework, the relationship between total IO and board governance is heterogeneous. However, specific types such as foreign, dedicated and pressure-resistant institutions represent active monitoring tools and push for increased board governance.

Research limitations/implications

The author provided useful recommendations for future research from a content and methodological perspective, e.g. the need for analyzing the impact of IO on sustainable board governance and other characteristics of top management team members, e.g. the chief financial officer.

Practical implications

As many regulatory bodies implemented regulations to promote shareholder rights and board governance, this literature review highlights the connections of both corporate governance mechanisms. Managers should conduct a careful and timely investor analysis and change the composition and compensation of the board of directors in line with institutional investors’ preferences.

Originality/value

This analysis makes useful contributions to prior research by focusing on IO and board governance, whereas the author structured the heterogeneous variables and results within the structured literature review. The authors guides researchers, regulatory bodies and business practice in this corporate governance topic.

Details

Corporate Governance: The International Journal of Business in Society, vol. 24 no. 2
Type: Research Article
ISSN: 1472-0701

Keywords

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