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1 – 10 of over 2000
Book part
Publication date: 16 October 2015

Charles J. Coate and Mark C. Mitschow

Benefit corporations are a form of incorporation that require management to pursue some specified social goal or benefit, even if this goal requires sacrificing profit…

Abstract

Benefit corporations are a form of incorporation that require management to pursue some specified social goal or benefit, even if this goal requires sacrificing profit maximization. Hence, benefit corporations are considered a new business model that explicitly incorporates a socially responsible component in the corporate mission. This alternative business model may offer investors and customers a more ethical corporate form due to the social responsibility motive.

Several states currently allow companies to incorporate as benefit corporations, and more states are considering such legislation. To be successful, benefit corporations will require either investment from the capital markets and/or favorable treatment from government entities. Thus, the potential success of benefit corporations is likely to rely on the general interest of private investors and citizens as well as the ability to communicate operational success.

As with the evolution of the for-profit corporate model and of free market economic systems, accounting may be critical to the success of benefit corporations. Accounting systems will need to be able to measure and report both profits and social benefits to the market. Socially conscious investors must have reliable information if they are to choose the benefit corporation model over other alternatives (e.g., maximizing their return from for-profit investments and making individual donations). Citizens must also have reliable information to bring pressure on governments to support this model if it proves viable.

It is still too early to determine benefit corporations’ long-term impact on society or even whether this business model will succeed in the marketplace. Our purpose is to offer a basic framework for evaluating benefit corporations relative to current substitutes and to consider characteristics that would contribute to benefit corporation success. Within this context, we consider accounting systems’ role in assessing the social utility of this new business model.

Details

Research on Professional Responsibility and Ethics in Accounting
Type: Book
ISBN: 978-1-78441-666-9

Keywords

Article
Publication date: 14 December 2021

Yann Ferrat, Frédéric Daty and Radu Burlacu

The growth of socially responsible assets has been exponential over the last decade, they now account for almost a third of professional investments. As the growth persists, faith…

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Abstract

Purpose

The growth of socially responsible assets has been exponential over the last decade, they now account for almost a third of professional investments. As the growth persists, faith and conviction investors reshape the equity markets. To fully comprehend the impact of socially conscious participants on security returns, this paper attempts to provide insights on how responsible investment growth has impacted the returns of sustainable stocks. The examination is split by investment horizon to account for short and long effects.

Design/methodology/approach

Using an exclusive dataset of non-financial ratings, provided by MSCI ESG research, the authors examine the cross-sectional returns of US and European sustainability-leading and lagging corporations between 2007 and 2019. Panel models robust to country, firm-year and industry effects were then employed to examine the impact of responsible investment growth on future stock returns.

Findings

The authors find evidence that the impact of responsible investment growth is dual contingent upon the timeframe considered. In the short run, sustainability-leading and lagging firms display similar stock returns. However, the spread in returns is negative over long horizons and increasing over time.

Originality/value

The examination performed in this study highlights the significant effect of responsible investment growth on future stock returns. Overall, the authors’ findings are consistent with the price pressure hypothesis in the short run and the cost of capital alteration over longer horizons.

Details

The Journal of Risk Finance, vol. 23 no. 1
Type: Research Article
ISSN: 1526-5943

Keywords

Article
Publication date: 6 January 2023

P. Raghavendra Rau and Ting Yu

Over the past two decades, the topics of Environmental, Social and Corporate Governance (ESG) and Corporate Social Responsibility (CSR) have attracted an increasing amount of…

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Abstract

Purpose

Over the past two decades, the topics of Environmental, Social and Corporate Governance (ESG) and Corporate Social Responsibility (CSR) have attracted an increasing amount of interest, reflecting a growing sensitivity of investors and corporations towards environmental, social and governance issues.

Design/methodology/approach

This survey offers an overview of the academic literature on ESG/CSR through the lens of investors, institutions and firms. We first discuss the definitions of ESG and CSR and their relationship to each other.

Findings

We next describe how ESG is measured and note problems with the measurement of and quality of ESG data and discrepancies between different measures of ESG. We then turn our attention to investors, examining what types of investors invest in ESG and the role of institutional investors in ESG. From the firm's perspective, we discuss why firms themselves conduct ESG. We also summarize the literature on the impact of ESG on firms: how ESG affects firms' financing, disclosure and reporting activities and firm performance. Finally, we describe other consequences of the focus of ESG and CSR on firms and investors.

Originality/value

This survey offers an overview of the academic literature on ESG/CSR through the lens of investors, institutions and firms.

Details

China Finance Review International, vol. 14 no. 1
Type: Research Article
ISSN: 2044-1398

Keywords

Article
Publication date: 26 September 2023

Manuel Lobato, Javier Rodríguez and Herminio Romero-Perez

This study aims to examine the herding behavior of socially responsible exchange traded funds (SR ETFs) in comparison to conventional ETFs during the COVID-19 pandemic.

Abstract

Purpose

This study aims to examine the herding behavior of socially responsible exchange traded funds (SR ETFs) in comparison to conventional ETFs during the COVID-19 pandemic.

Design/methodology/approach

To test for herding behavior, the authors use the cross-sectional absolute deviation and a quadratic market model.

Findings

During the pandemic, investments in socially responsible financial products grew rapidly. And investors in the popular SR ETFs herd during this special period, while holders of conventional ETFs did not.

Practical implications

Investors in socially responsible investments must do their own research and make their own financial decisions, rather than follow the crowd, especially during extreme events like the COVID-19 pandemic.

Originality/value

The evidence shows that, during the pandemic, socially responsible ETFs behaved in line with theoretical predictions of herding, that is, herding is more significant during extreme market conditions.

Details

Review of Behavioral Finance, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1940-5979

Keywords

Open Access
Article
Publication date: 22 September 2023

Tasruma Sharmeen Chowdhury and S.M. Kalbin Salema

This study aims to identify the factors that influence the willingness of Bangladeshi retail investors to invest in ṣukūk.

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Abstract

Purpose

This study aims to identify the factors that influence the willingness of Bangladeshi retail investors to invest in ṣukūk.

Design/methodology/approach

The authors surveyed Bangladeshi retail investors using a structured questionnaire to understand their perspectives on potential investment in ṣukūk. The authors considered the behavioral aspects of retail investors and the desired ṣukūk features to analyze the demand side. Factors and regression analyses were performed to identify the persuading factors.

Findings

The results indicate that investor awareness is a fundamental factor in potential investments in ṣukūk. Investors perceive the security represented by government and third-party guarantees as a persuasive feature of ṣukūk. The tradability and tenor of ṣukūk also affect the investment intention. Sharīʿah consciousness of the investors also plays a significant role in their investment decisions.

Research limitations/implications

One limitation of this study is that it incorporates potential individual investors only, and precludes institutional investors. In the future, there is scope for research to explore the demand factors impacting institutional investors of ṣukūk in Bangladesh.

Practical implications

The authors expect that the study will aid policymakers and ṣukūk issuers in crafting strategies to cater to the needs of Bangladeshi retail investors.

Originality/value

This study is the earliest research conducted in Bangladesh to determine the factors impacting the willingness of individual investors to make their potential investments in ṣukūk. To the best of the authors' knowledge, no study has analyzed the desired ṣukūk features from the perspective of Bangladeshi retail investors.

Details

Islamic Economic Studies, vol. 31 no. 1/2
Type: Research Article
ISSN: 1319-1616

Keywords

Article
Publication date: 16 October 2023

Ekrem Yilmaz

The purpose of this paper is to examine the applicability of Preference Similarity Theory (PST) and Protection Motivation Theory (PMT) in identifying the target audience and…

Abstract

Purpose

The purpose of this paper is to examine the applicability of Preference Similarity Theory (PST) and Protection Motivation Theory (PMT) in identifying the target audience and developing effective marketing strategies, particularly in non-Muslim countries, to increase the market growth and reach of sukuk to broader investor groups and provide recommendations for such strategies.

Design/methodology/approach

After separately examining the effects of PST and PMT on marketing sukuk, recommendations are presented from a shared perspective of these two theories.

Findings

The findings of this study suggest that understanding the values, beliefs and perceptions of potential investors is crucial for effectively marketing sukuk investments, especially in non-Muslim countries. The PST and PMT provide useful frameworks for tailoring sukuk offerings and communicating effectively about the risks and benefits of sukuk investments to attract investors who identify with the values and beliefs embodied in sukuk.

Originality/value

To the best of the author's knowledge, this is the first paper to examine the marketing of sukuk in non-Muslim countries. This study is also the first paper to discuss sukuk in the context of PST and PMT. In addition, this study is expected to guide banks in the marketing of sukuk.

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: 4 December 2018

C. Edward Chang, Thomas M. Krueger and H. Doug Witte

The purpose of this paper is to examine the operating characteristics as well as risk and performance measures of all available self-proclaimed socially responsible funds…

Abstract

Purpose

The purpose of this paper is to examine the operating characteristics as well as risk and performance measures of all available self-proclaimed socially responsible funds (hereafter SRFs) in the USA over the ten-year (2007–2016) period. The first research question addressed is: Do SRFs perform as well as the average of all mutual funds in their respective categories? The second research question addressed is: Are SRF expense ratios correlated with fund performance?

Design/methodology/approach

This study analyzes all socially responsible equity mutual funds, as self-reported to Morningstar. This paper empirically compares operating characteristics and performance measures of SRFs relative to category averages in the US mutual fund industry. Operating characteristics include expense ratios and annual turnover rates. Performance measures include conventional return, risk and risk-adjusted return measures.

Findings

Although prior research suggests that socially responsible investing (SRI) indexes and SRI-friendly stocks have favorable returns, this study finds that these self-proclaimed SRFs underperform the average of all mutual funds in matched equity categories. However, this study demonstrates that a simple filter based on expense ratios can identify those SRFs that will enable investors to do quite well while doing good.

Originality/value

The contribution of this paper is twofold. First, the authors report that self-proclaimed SRFs, as a whole, have not generated competitive returns relative to other mutual funds in the same categories over the past ten years. This result contradicts the notion that socially responsible investors do not give up return performance when investing with their conscience. Second, the authors find that those SRFs with expense ratios in the lowest quartile of their respective category have significantly higher risk-adjusted returns and significantly lower turnover than category averages. Thus, by focusing on SRFs with low-expense ratios, socially responsible investors can do quite well while doing good.

Details

Managerial Finance, vol. 45 no. 1
Type: Research Article
ISSN: 0307-4358

Keywords

Article
Publication date: 1 March 2013

Praveen K. Das and S.P. Uma Rao

The purpose of this paper is to evaluate the performance of socially responsible funds by closely examining funds' investment styles.

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Abstract

Purpose

The purpose of this paper is to evaluate the performance of socially responsible funds by closely examining funds' investment styles.

Design/methodology/approach

The authors apply William Sharpe's method of style analysis to evaluate the performance of 94 US socially responsible mutual funds. By using the fund style as a benchmark, the authors are able to separate the performance attributed to style and selection.

Findings

The authors observe that underperformance of socially responsible funds is more pronounced and common than identified in the previous literature. Proponents of socially responsible investing argue that screening process provides an opportunity to fund managers to identify best companies in terms of future financial performance. The paper finds that active management of mutual funds is an important determinant of their performance in socially responsible investing industry. This paper provides evidence supporting that active management of socially responsible funds add value.

Originality/value

This study will help investors in allocating their portfolios among many of the available SR funds. The result – actively managed SR funds outperform their passive counterparts – will be valuable for those investors who are willing to invest in socially responsible funds but are concerned about the financial performance.

Details

Social Responsibility Journal, vol. 9 no. 1
Type: Research Article
ISSN: 1747-1117

Keywords

Article
Publication date: 3 August 2015

Marta Alvarez and Javier Rodríguez

The purpose of this paper is to examine the performance and diversification value of water-related funds. As pollution, climate change and accelerated population growth threaten…

Abstract

Purpose

The purpose of this paper is to examine the performance and diversification value of water-related funds. As pollution, climate change and accelerated population growth threaten water resources worldwide, such resources have become a sought-after asset. For most investors, it is impractical to physically hold water as part of a portfolio; therefore, an open question is how to better gain exposure to this asset. The authors propose a look at water-related mutual funds, an issue not found addressed in the literature. In addition to the investment potential of these funds, investors might be drawn to them as part of a more comprehensive socially responsible agenda.

Design/methodology/approach

In the present study, the authors identify and measure the risk-adjusted performance and diversification value of open-end funds dedicated to investments in water-related securities. Jensen’s alpha is used to measure risk-adjusted performance, whereas diversification value is examined by implementing a methodology widely used in the mutual fund literature.

Findings

Consistent with previous studies on the performance of ethical or socially responsible mutual funds, the authors found that their sample of water-related mutual funds neither outperform nor underperform two benchmarks. However, the authors also found that they offer potential diversification gains for international mutual funds’ portfolios.

Research limitations/implications

Open-end water-related mutual funds have only been recently created, and currently, very few funds are available to investors. These facts limit the sample size and the length of the return series examined.

Originality/value

The authors have not found a paper that examines the performance and diversification value of water-related mutual funds. These funds present themselves as a practical way for individual investors to gain exposure to the commodity of water.

Details

Social Responsibility Journal, vol. 11 no. 3
Type: Research Article
ISSN: 1747-1117

Keywords

Article
Publication date: 3 May 2016

William Dilla, Diane Janvrin, Jon Perkins and Robyn Raschke

Despite the increasing demand for socially responsible investments (SRIs) and the importance of information intermediaries in providing corporate social responsibility (CSR…

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Abstract

Purpose

Despite the increasing demand for socially responsible investments (SRIs) and the importance of information intermediaries in providing corporate social responsibility (CSR) performance information through SRI screens, relatively little is known about the relationship between nonprofessional investors’ views regarding SRI, their use of SRI screens and their actual SRI behavior. This study aims to distinguish between investor views about the importance of corporate environmental responsibility (environmental performance importance views) and whether they view environmentally responsible firms as yielding higher returns (environmental performance return views). It examines the association between these views, SRI screen use and reported SRI holdings.

Design/methodology/approach

Nonprofessional investor participants completed an online survey about their SRI investment views, screen use and investment behavior. The survey yielded 201 usable responses.

Findings

The strength of participants’ environmental performance importance and environmental performance return views is positively associated with their use of SRI screens and the proportion of their portfolios held in SRIs. SRI screen use only partially mediates the association between investors’ environmental performance importance and return views and their SRI holdings.

Research limitations/implications

The study does not precisely address what types of SRI screens nonprofessional investors may be using. It does not control for investors’ specific experience with SRIs, nor does it examine how or why investors come to believe that environmental responsibility may improve a company’s return potential.

Practical implications

The fact that SRI screen use only partially mediates the association between investors’ views and their SRI holdings suggests that either reliable, unfiltered CSR information is important for nonprofessional investors or some investors are choosing SRIs without obtaining adequate relevant information.

Social implications

The study’s findings confirm earlier research findings which show an association between investors’ pro-environmental views and their decision to invest in SRIs (Williams, 2007; Nilsson, 2008) and suggest that nonprofessional investors are becoming aware of the positive relation between environmental performance and firm value (Dhaliwal et al., 2011; Clarkson et al., 2013; Hawn et al., 2014; Matsumura et al., 2014).

Originality/value

This study simultaneously examines the influence of environmental performance importance (an “alternative” investment perspective) and environmental performance return (a “traditional” investment perspective) on investors’ SRI behavior.

Details

Sustainability Accounting, Management and Policy Journal, vol. 7 no. 2
Type: Research Article
ISSN: 2040-8021

Keywords

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