Sustainable Investment: Interrelated among Corporate Governance, Economic Performance and Market Risks Using Investor Preference Approach

Abstract

Prior studies are lacking on the drivers of sustainable investment. Hence, this study examines the relationship between the social aspects, environmental aspects, economic benefits, market conditions, and corporate governance issues on sustainable investment. Sustainable investment has been rising since the last decade. However, sustainable investment is preceded by ethical investment, green investment, and socially responsible investment. In order to understand the sustainability of an investment before decision-making, it proposed a set of attributes to measure its sustainability using investor’s linguistics preferences. The proposed attributes are interrelated and based on investor’s linguistic preferences. The study employs the fuzzy set theory to handle the uncertainty resulting from the vagueness of linguistic terms and applies decision making trial and evaluation laboratory (DEMATEL) to determine the nature of interrelationships among sustainable investment attributes. The result indicates that corporate governance, economic performance, and market risks are the causal aspects of sustainable investment. In addition, this study found that transparency, anti-corruption, and board diversity were the two most important criteria of corporate governance. Furthermore, the three most important criteria of economic performance presented the model were excess return, market value, and shareholder loyalty. The theoretical and practical implications of sustainable investment are discussed.

Sustainable Funds’ Performance Evaluation

“…Ming-Lang Tseng et al in the research used a very interesting way to analyze sustainable investments using the fuzzy set theory. The results of the study showed that corporate governance, economic performance and market risk were the causal aspects of sustainable investments [52]. Nomeda Dobrovolskiene and Rima Tamosiuniene in their article presented a sustainability-oriented model of financial resource allocation in a project portfolio and paid a lot attention to multi-criteria decision-making methods [53].…”

Improving the Strategic Management of Investment Activities of Industrial Enterprises as a Factor for Sustainable Development in a Crisis

“…Moreover, competent investment, on the one hand, positively affects the sustainable development of the enterprise, and on the other hand, directly depends on the current stability of the company (M.L. Tseng et al 2019) [21]. This two-sided dependence necessitates the development of methodological approaches to the management of investment activities of industrial enterprises in the context of increasing the sustainability of their development.…”

Sustainable Banking: New Forms of Investing under the Umbrella of the 2030 Agenda

“…For example, focusing on SDGs and exchanged-traded funds (ETF), Miralles-Quirós et al [7] concluded that investing in this type of product, which tracks companies linked to SDGs, is appropriate for two different reasons: (i) it leads to a better world while providing a financial return, and (ii) better performance improvements are obtained, as investment in companies that strive for economic growth (SDG 8) and the expansion of industry, innovation, and infrastructure (SDG 9) provide better results in performance and cumulative returns. Other studies have also concluded that sustainable investment offers high-excess returns, high market values, and shareholder loyalty [32]. In sum, previous literature has considered SRI from an SDG perspective, but there is space to have a deeper understanding of SDGs under the lens of SIBs, given that social bonds link responsible investment and social partnerships and, therefore, SDGs.…”