Ethical window dressing: SRI funds are as good as their word

Muñoz, Fernando; Ortiz, Cristina; Vicente, Luis

doi:10.1016/j.frl.2022.103109

Cited by 7 publications

(6 citation statements)

References 34 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…Although we do not show a causal link between high ratings and the incidence of scandals, the results invite for further examinations of the role of the companies in ESG washing (Candelon et al, 2021) and green washing (Yu et al, 2020). Recent stream of the literature address the problems of ethical window dressing (Muñoz et al, 2022). Our work suggests that a high ESG rating does not mean that the companies have integrated 'good behavior' and conducts business ethically and responsibly.…”

Section: Conclusion and Discussioncontrasting

confidence: 58%

“…In the case of Hypothesis 1b, ESG ratings would merely be function as creating impressions about a company as being responsible, meaning in the case of corporate misconduct, the risk of a problematic deception increases. Some argue that sustainability merits, including but not limited to, ESG ratings can be used as a window dressing (as addressed by Muñoz et al, 2022) and green washing (as addressed by Yu et al, 2020).…”

Section: Figure 1: Impression Management Mechanismsmentioning

confidence: 99%

“…As for the competing hypothesis, if a high 'S' score is merely contributing to creating the impression that a company is responsible on human rights, workforce, community and product safety, the audience might be deceived when contradicting behavior is disclosed to the public (Kjaer, 2023). Some scholars question if these claims are merely window dressing (Candelon et al, 2021;Muñoz et al, 2022) or green washing (Yu et al, 2020). argues that from a company perspective, there is a natural difference between talk, decision and action, and that action must start with talking.…”

Section: Hypothesis 2amentioning

confidence: 99%

See 2 more Smart Citations

Corporate Scandals: In The Age of ‘Responsible Business’

Kjær

View full text Add to dashboard Cite

This thesis examines how corporate scandals work, the circumstances that make them possible, and how they are accounted for by wider society. The thesis finds that first, companies with high social responsibility scores (according to environmental, social, and governance (ESG) ratings) are more prone to scandals compared to a matched control group. Second, it finds that the Danske Bank money laundering scandal emerged and endured through the interaction of different social-control agents who formed a framing coalition against the alleged company. Third, the thesis finds that identities of companies ending up in scandals are configurated through interactions of human and nonhuman actors, including framing devices and experts. Recently a new stream of literature has emerged within the social-evaluation literature, analyzing the role of social-control agents in scandal emergence, and in doing so, viewing scandals as a social construction. Addressing this emerging stream of scandal research, this thesis examines the phenomenon of corporate scandals in the age of ‘responsible business.’ The first chapter, Deceived by ‘S’: corporate scandals and ESG, examines if ESG ratings (a measure of good behavior) can predict scandals. The empirical inquiry is built on a comprehensive data material: a unique, hand collected sample of 113 global corporate scandals and a corresponding control group. Using logit regressions, the first chapter finds that scandals happen in otherwise perceived ‘socially responsible companies’ (with high ‘S’ scores, according to ESG rating agencies). In doing so, this thesis contributes with new empirical evidence to a growing stream of literature that takes a critical view on the reliability of ESG rating providers. This unexpected – and thought-provoking – finding not only raises questions about the reliability of the ratings, but also about how scandals work and are accounted for. The subsequent two chapters address these questions. The second chapter, How social-control agents interact in scandal emergence: insights from Danske Bank, examines how scandals emerge and endure. In doing so, it examines how different social-control agents interact therein. Shifting the methodological approach to a qualitative deep dive case study, this chapter analyzes the Danske Bank money laundering scandal through large data material and original interviews with central persons involved. Drawing on Goffman (1959) and Entman (1993) allows for analyzing interactions of multiple social-control agents. In doing so, the analysis reveals how a framing coalition of different social-control agents were formed to create a case against Danske Bank in the money laundering scandal. With this framing coalition the case went from being isolated to misconduct in the bank’s Estonian branch to being a global scandal. This chapter contributes to existing social evaluation literature with the theory concept of a framing coalition developed by combining Entman (1993) and Goffman (1959). It shows how different social-control agents impose each their framings on the audience and interact with each other with each their frontstage and backstage. In the third chapter, Framing and overflowing in corporate scandals, the focus shifts to the company. Drawing on actor-network theory (ANT) and Callon’s (1998) twin notions of framing and overflow, this chapter examines how company identities are configurated before and during scandal emergence. The analysis of four corporate scandals finds that nonhuman framing devices, such as medical labels and certifications, contribute to establishing a frame of companies, serving as façades. In addition, it shows how experts played a central role in purifying the frame of the scandal firm.

show abstract

Section: Conclusion and Discussioncontrasting

confidence: 58%

Section: Figure 1: Impression Management Mechanismsmentioning

confidence: 99%

Section: Hypothesis 2amentioning

confidence: 99%

See 1 more Smart Citation

Corporate Scandals: In The Age of ‘Responsible Business’

Kjær

View full text Add to dashboard Cite

show abstract

“…En el contexto de los fondos ISR, hablamos de maquillaje de cartera si los fondos invierten en todo tipo de activos mientras invierten en activos ASG sólo cuando deben hacer públicas sus carteras. Muñoz et al (2022) hacen referencia al maquillaje de carteras ético cuando lo que se intenta mejorar es la media de las puntuaciones éticas recibidas por las empresas que forman parte de la cartera.…”

Section: ¿Los Fondos Isr Son Realmente Sostenibles Y Responsables?unclassified

“…Por lo tanto, no incurren en este tipo de prácticas de manipulación de carteras. Muñoz et al (2022) llegaron a una conclusión similar con una metodología distinta: compararon información pública y datos de composición de carteras que no están a disposición del inversor particular. Asimismo, Curtis et al (2021) analizaron más de 200 fondos ISR y no encontraron evidencias compatibles con el "window dressing".…”

Section: ¿Los Fondos Isr Son Realmente Sostenibles Y Responsables?unclassified

Inversión socialmente responsable: aspectos económicos y psicológicos en la gestión de fondos de inversión

Djampou

2023

BEE

View full text Add to dashboard Cite

Los datos proporcionados por organismos tanto nacionales como internacionales revelan el interés creciente que los inversores particulares manifiestan hacia los fondos de inversiones sostenibles y responsables (ISR). Si bien desean rentabilidades positivas, dichos inversores esperan de esos fondos una inversión en activos que cumplen criterios ambientales, sociales y de gobierno corporativo (ASG). Estos criterios imponen una clara limitación en las estrategias que los gestores de fondos ISR pueden aplicar. ¿El doble objetivo financiero y ético implica un comportamiento diferencial de los gestores de fondos ISR? El propósito principal de este artículo es proporcionar una visión económica y psicológica de los ISR. Analizaremos desde la revisión bibliográfica si existen diferencias de rentabilidad entre fondos convencionales y fondos ISR e investigaremos la relación entre rentabilidad y flujo de dinero y la existencia del efecto disposición en ISR, con el fin de ofrecer a los gestores y a los inversores una visión global para sus tomas de decisiones financieras. Recibido: 06 julio 2022Aceptado: 21 julio 2022

show abstract

Measuring the efficiency of mutual funds: Does ESG controversies score affect the mutual fund performance during the COVID-19 pandemic?

Petridis,

Kiosses,

Tampakoudis

et al. 2023

Oper Res Int J

View full text Add to dashboard Cite

This research investigates the influence of Environmental, Social, and Governance (ESG) performance on mutual fund efficiency during the COVID-19 pandemic. Employing Data Envelopment Analysis (DEA) and hypothesis testing, we examine the effect of ESG controversies scores on mutual fund performance. Our sample comprises 17,961 mutual funds worldwide, with available data during the later phase of the pandemic. Mutual fund performance is evaluated using the DEA methodology, and efficiency scores are derived from the DEA portfolio efficiency index. To explore the impact of ESG controversies scores on mutual fund performance, the sample is divided into two categories based on the ESG controversies score quartile. The findings demonstrate that mutual funds with higher ESG controversies scores, which indicate fewer ESG controversies, outperformed those with lower scores. Specifically, mutual funds embroiled in fewer ESG controversies exhibited higher financial efficiency, regardless of their geographical investment area. These findings offer essential insights for both investors and mutual fund managers. Retail and institutional investors could recognize the potential performance gains associated with investing in socially responsible mutual funds during crisis periods such as the COVID-19 pandemic. Furthermore, mutual fund managers should consider avoiding securities with more ESG controversies in their portfolios, considering that ESG controversies could have an adverse impact on financial efficiency during periods of health, environmental, or market crises. While our study contributes valuable insights, it is subject to limitations due to the unavailability of time-series data for mutual funds during the COVID-19 pandemic. Nonetheless, it represents the first attempt to utilize the ESG controversies score as a determinant of mutual fund financial efficiency during the pandemic era.

show abstract

Ethical window dressing: SRI funds are as good as their word

Cited by 7 publications

References 34 publications

Corporate Scandals: In The Age of ‘Responsible Business’

Corporate Scandals: In The Age of ‘Responsible Business’

Inversión socialmente responsable: aspectos económicos y psicológicos en la gestión de fondos de inversión

Measuring the efficiency of mutual funds: Does ESG controversies score affect the mutual fund performance during the COVID-19 pandemic?

Contact Info

Product

Resources

About