Investors have shown increasing interest in Socially Responsible Investments (SRI) in the past few years, especially during the financial crisis caused due to the outbreak of the COVID-19 pandemic. SRI are evaluated on the basis of Environmental, Social and Governance (ESG) criteria. ESG information allows investors to assess the risks associated with a particular firm and how the firm manages or intends to manage future risks. Amidst the increasing investor interest in ESG products, we attempt to study the value addition of ESG performance to investors during crisis period. Using a sample of ESG rated firms listed on the Bombay Stock Exchange (BSE), we examine the investment performance, trading volumes and return volatility of ESG stocks in an emerging market like India during the COVID-19 crisis. The results of our event study conducted around the important events that have occurred in India during the COVID-19 pandemic provide evidence that investors can use ESG information as a signal of future stock performance. Most importantly, ESG performance provides downside protection during crisis times. Our results show that ESG performance does not prove to be detrimental to investment performance during normal times. Also, ESG performance was found to reduce stock return volatility during the COVID-19 pandemic. Overall, our study attempts to establish an investment case for ESG stocks in emerging markets in India by providing support to the good management hypothesis.

Socially responsible investments (SRIs) have occupied the center stage of discussion in the finance and social discourses. This study aims to unravel the intellectual structure of the research on SRI. At present, SRI is undertheorized, and the extant literature is divided into multiple fragments. Existing review studies on SRI suffer from limitations related to definitions and methods. We organize the theoretical lines of extant research and tie them up with empirical studies in the field by using systematic literature review and bibliometric techniques on a corpus of as large as 976 research articles. Our study describes the current dynamics of the SRI field, clusters the fragments of research into meaningful themes, highlights the impediments to current research, and also proposes an agenda for future research. Although research on SRI occurs globally, the lack of academic collaboration among scholars and undertheorization are two major challenges of the field. Future research could examine ESG‐based asset pricing models, sustainable factor investing, and measures to tackle greenwashing.

Over the years, firms have been using Corporate Social Responsibility (CSR) as a strategic tool to improve their competitiveness and ultimately benefit their stakeholders. The evidence on the impact of CSR on firm performance, as documented in the literature, is mixed. This paper aims to examine the relationship between socially responsible behaviour and firm value in the Indian context. We use the natural research setting created by the Indian Companies Act, 2013, which mandates a category of firms to spend at least 2% of their net profits on CSR activities. Over the years since the introduction of the mandatory CSR regime in India, few firms have continued to spend more than the statutory minimum on CSR activities. Using Regression Discontinuity Design (RDD), we have examined the impact of CSR spending in excess of the statutory minimum on the short-term and long-term performance of firms. Using a sample of listed Indian firms which incurred CSR spending in at least one out of the preceding five financial years ending on March 31, 2019, we find that firm's choice of spending more than the required minimum on CSR negatively affects its short-term financial performance. The evidence on the impact of excess CSR spending on long-term financial performance of such firms is mixed. Overall, our study provides evidence that CSR spending in excess of the statutory minimum imposes social burden on the business activities of the firms at the expense of returns to the shareholders. The findings of our study may help firms design their CSR policies and expenditure. The evidence may also help policymakers in determining the level of mandatory CSR spending.