A tale of values-driven and profit-seeking social investors |
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Authors: | Jeroen Derwall Kees Koedijk Jenke Ter Horst |
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Affiliation: | a School of Economics and Management, Tilburg University, P.O. Box 90153, 5000 LE Tilburg, The Netherlands b European Centre for Corporate Engagement, Maastricht University, P.O. Box 616, 6200 MD Maastricht, The Netherlands c Center for Economic Policy Research, 77 Bastwick Street, London EC1V 3PZ, UK |
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Abstract: | The segmentation of the socially responsible investing (SRI) movement with a values-versus-profit orientation solves the puzzling evidence that both socially responsible and controversial stocks produce superior returns. We derive that the segment of values-driven investors primarily uses “negative” screens to avoid controversial stocks, while the profit-driven segment uses “positive” screens. As the result of an empirical analysis over the period 1992-2008, we base our segmentation on investment screens that help us to examine whether values affect prices. We find that, although the profit-driven segment earns abnormal returns in the short run, these profit-generating opportunities do not persist in the long run for SRI stocks. However, our conclusions highlight the observation that different views on SRI can be complementary in the short run. |
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Keywords: | A13 G11 |
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