Strategies for Responsible Investing: <i>Emerging Academic Evidence</i>

Atta-Darkua, Vaska; Chambers, David; Dimson, Elroy; Z, Ran; Yu, Ting

doi:10.3905/jpm.2020.46.3.026

Cited by 14 publications

(6 citation statements)

References 12 publications

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“…Pragmatic rather than cynical engagement could be encouraged by emphasizing enhanced communication about methodologies (e.g. data used and peer group comparisons) and on how ratings may be used by investors to allocate capital (Atta-Darkua, Chambers, Dimson, Ran, & Yu, 2020). This approach might overcome some contestation and potentially increase microstatactivism within rated companies.…”

Section: Managerial Implicationsmentioning

confidence: 99%

The Politics of Reactivity: Ambivalence in corporate responses to corporate social responsibility ratings

Slager

Gond

2020

Organization Studies

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Organizational ratings exude anxiety and allure, but relatively little is known about how managers balance resisting and mobilizing ratings. We explore this duality with a qualitative study on managerial responses to corporate social responsibility (CSR) ratings. Based on interviews focused on CSR ratings with managers of 60 companies, we induce four responses to ratings: grumbling, contestation, cherry-picking and microstatactivism. We further show how managers combine resistance and mobilization in two ambivalent engagement modes. Our analysis contributes to the literature by developing a more nuanced theory of corporate responses to organizational ratings, which demonstrates the importance of ambivalence in managing institutional pressure.

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Section: Managerial Implicationsmentioning

confidence: 99%

The Politics of Reactivity: Ambivalence in corporate responses to corporate social responsibility ratings

Slager

Gond

2020

Organization Studies

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“…Vaska Atta-Darkua, DavidChambers, Elroy Dimson, Zhenkai Ran, and Ting Yu in their research have written that empirical evidence has shown that engagement can be an effective tactic in some cases and can help enhance firm behavior [31]. The evidence for divestment having a direct impact on firms is more mixed.…”

Section: Principle 4 Principle 5 Principlementioning

confidence: 99%

Sustainable Funds’ Performance Evaluation

et al. 2020

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The purpose of this research is to consider if the growing popularity of sustainable investment does not create additional risks in investing. Different views on sustainable investments were analyzed to identify different approaches to the main risks. A quantitative analysis was carried out to investigate the possible benefits and advantages of sustainable investment. Without taking into account the social perks of investing in sustainable funds, this study evaluates the performance and economic returns of both sustainable and traditional funds. The research was carried out in two parts by comparing samples of 30 sustainable and 30 traditional funds. Firstly, such methods as annual returns, standard deviations, Sharpe ratios, skewness, and kurtosis were calculated and analyzed. The Capital Asset Pricing Model (CAPM), Fama–French three-factor model and Carhart four-factor model were used to value different market portfolios. The findings of this study suggest that sustainable funds are less risky than traditional funds. However, at the same time, we want to point to pay attention to the period of our analysis and to have in mind that an increasing demand of social responsible assets increases risks as well. However, no clear evidence was found to confirm that sustainable funds can generate higher returns compared to traditional piers or benchmark index. Moreover, after studying different methods the study reveals that the Fama–French three-factor model was the most suitable for explaining the traditional and sustainable funds’ results.

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“…While such findings are widely accepted by academics and practitioners, a series of mixed results has led to disagreement on whether security selection strategies based on sustainable criteria are truly superior to non‐sustainable portfolios (see Atta‐Darkua et al., 2020). Early studies on the performance of sustainable investments focused on the analysis of sustainable investment funds via alpha regressions or spanning tests (see Bauer et al., 2005; Renneboog et al., 2008).…”

Section: Introductionmentioning

confidence: 99%

Implementation and profitability of sustainable investment strategies: An errors‐in‐variables perspective

Auer

2021

Business Ethics Env & Resp

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Firm‐level studies of sustainable investment performance are typically limited by an errors‐in‐variables bias (i.e., a distortion of estimated regression coefficients caused by measurement error in explanatory variables). Using recent advances in statistical methodology, we present the first cross‐sectional analysis of sustainable stock selection which adequately corrects for this bias and additionally answers the question of whether betas with respect to sustainable risk factors or sustainable characteristics (i.e., environmental, social, and governance ratings) are more relevant in portfolio selection. Within the universe of S&P 500 stocks, which is highly relevant from the investor attention and liquidity perspectives, we find that, after accounting for errors‐in‐variables bias, both types of variables become insignificant. Consequently, they do not add value to investment portfolios and are not vital in models explaining stock returns. Among classic predictors with a long history of use in the investment fund industry, only the market‐to‐book ratio provides independent investment and pricing information.

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Strategies for Responsible Investing: Emerging Academic Evidence

Cited by 14 publications

References 12 publications

The Politics of Reactivity: Ambivalence in corporate responses to corporate social responsibility ratings

The Politics of Reactivity: Ambivalence in corporate responses to corporate social responsibility ratings

Sustainable Funds’ Performance Evaluation

Implementation and profitability of sustainable investment strategies: An errors‐in‐variables perspective

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