Red and Blue Investing: Values and Finance

Hong, Harrison; Kostovetsky, Leonard

doi:10.2139/ssrn.1214382

Cited by 380 publications

(69 citation statements)

References 29 publications

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“…In this respect, our paper contributes to the rapidly growing literature on socially responsible investment that shows that fund portfolio allocation and the resultant firms' cost of capital, and ultimately their performance, may be affected by the pursuit of social or ethical objectives by decision makers-in particular, by investors (Renneboog, Ter Horst, and Zhang 2008;Hong and Kacperczyk 2009;Hong and Kostovetsky 2012). Our results show that even the transmission of monetary policy may be affected by the religioninspired objectives pursued by a set of bank managers and their clients.…”

Section: Introductionmentioning

confidence: 64%

The Transmission of Monetary Policy Through Conventional and Islamic Banks

Zaheer¹,

Ongena

Wijnbergen

2013

SSRN Journal

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We investigate the differences in banks' responses to monetary policy shocks across bank size, liquidity, and type-i.e., conventional versus Islamic-in Pakistan between 2002:Q2 and 2010:Q1. We find that following a monetary contraction, small banks with liquid balance sheets cut their lending less than other small banks. In contrast, large banks maintain their lending irrespective of their liquidity positions. Islamic banks, though similar in size to small banks, respond to monetary policy shocks as large banks. Hence, ceteris paribus, the credit channel of monetary policy may weaken when Islamic banking grows in relative importance.JEL Codes: E5, G2.

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Section: Introductionmentioning

confidence: 64%

The Transmission of Monetary Policy Through Conventional and Islamic Banks

Zaheer¹,

Ongena

Wijnbergen

2013

SSRN Journal

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“…However, the motives, expectations, behavior and characteristics of fund managers investing in ESG stocks are much less often explored in the literature. Among existing studies in that area, Hong and Kostovetsky [20] discussed the role of fund managers' political values in their investing in ESG stocks. With the use of the KLD score as a measure of firm responsibility, the authors found, that managers, who are more Democrat-leaning are more willing to invest in firms with positive social features, such as excellent employee relations and clean environmental records.…”

Section: Esg and Fund Managers-review Of The Literaturementioning

confidence: 99%

ESG Issues among Fund Managers—Factors and Motives

Przychodzeń¹,

Gómez‐Bezares

Przychodzeń

et al. 2016

Sustainability

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This paper investigates the motives, behavior, and characteristics shaping mutual fund managers' willingness to incorporate Environmental, Social and Governance (ESG) issues into investment decision making. Using survey evidence from fund managers from five different countries, we demonstrate that this predisposition is the stronger, the shorter their average forecasting horizon and the higher their level of reliance on business risk in portfolio management is. We also find that the propensity to incorporate ESG factors is positively related to an increasing level of risk aversion, an increasing importance of salary change and senior management approval/disapproval as motivating factors as well as length of professional experience in current fund and increasing significance of assessment by superiors in remuneration. Overall, our evidence suggests that ESG diligence among fund managers serves mainly as a method for mitigating risk and is typically motivated by herding; it is much less important as a tool for additional value creation. The prevalent use of ESG criteria in mitigating risk is in contrast with traditional approach, but it is in line with behavioral finance theory. Additionally, our results also show a strong difference in the length of the forecasting horizon between continental European and Anglo-Saxon fund managers.

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“…The information in these profiles forms the basis for constructing the widely-studied KLD STATS measures of CSR (see, for instance, Hong and Kostovetsky, 2012;Hong, Kubik, and Scheinkman, 2012;Cheng, Hong, and Shue, 2013;Waddock and Graves, 1997;Chatterji, Levine, and Toffel, 2009). For each firm, KLD's analysts collect relevant ESG information and include it in the respective Socrates company profile.…”

Section: Kld Socratesmentioning

confidence: 99%

Corporate Goodness and Shareholder Wealth

Krueger

2013

SSRN Journal

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Using a unique data set, I study how stock markets react to positive and negative events concerned with a firm's corporate social responsibility (CSR). I show that investors respond strongly negatively to negative events and weakly negatively to positive events. I then show that investors do value "offsetting CSR", that is positive CSR news concerning firms with a history of poor stakeholder relations. In contrast, investors respond negatively to positive CSR news which is more likely to result from agency problems. Finally, I provide evidence that CSR news with stronger legal and economic information content generates a more pronounced investor reaction. Electronic copy available at: http://ssrn.com/abstract=2287089 JEL-Classification Corporate Goodness and Shareholder WealthAbstract Using a unique data set, I study how stock markets react to positive and negative events concerned with a firm's corporate social responsibility (CSR). I show that investors respond strongly negatively to negative events and weakly negatively to positive events. I then show that investors do value "offsetting CSR", that is positive CSR news concerning firms with a history of poor stakeholder relations. In contrast, investors respond negatively to positive CSR news which is more likely to result from agency problems. Finally, I provide evidence that CSR news with stronger legal and economic information content generates a more pronounced investor reaction.

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Red and Blue Investing: Values and Finance

Cited by 380 publications

References 29 publications

The Transmission of Monetary Policy Through Conventional and Islamic Banks

The Transmission of Monetary Policy Through Conventional and Islamic Banks

ESG Issues among Fund Managers—Factors and Motives

Corporate Goodness and Shareholder Wealth

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