Socially Responsible Investing in Good and Bad Times (2024)

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Volume 35 Issue 4 April 2022
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Ravi Bansal

Fuqua School of Business, Duke University and NBER

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Di (Andrew) Wu

Stephen M. Ross School of Business, University of Michigan

Send correspondence to Andrew Wu, andydiwu@umich.edu.

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Amir Yaron

Bank of Israel The Wharton School, University of Pennsylvania and NBER

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The Review of Financial Studies, Volume 35, Issue 4, April 2022, Pages 2067–2099, https://doi.org/10.1093/rfs/hhab072

Published:

18 June 2021

Article history

Received:

05 March 2018

Editorial decision:

30 January 2021

Published:

18 June 2021

Corrected and typeset:

05 August 2021

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    Ravi Bansal, Di (Andrew) Wu, Amir Yaron, Socially Responsible Investing in Good and Bad Times, The Review of Financial Studies, Volume 35, Issue 4, April 2022, Pages 2067–2099, https://doi.org/10.1093/rfs/hhab072

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Abstract

We investigate the time variability of abnormal returns from socially responsible investing (SRI). Using portfolio regressions and event studies on multiple data sources, including analyst ratings, firm announcements, and realized incidents, we find that highly rated SRI stocks outperform lowly rated SRI stocks during good economic times, for example, periods with high market valuations or aggregate consumption, but underperform during bad times, such as recessions. This variation in abnormal returns of high-SR stocks vis-à-vis low SR stocks is consistent with a wealth-dependent investor preference for SR stocks that leads to an increased (decreased) demand for SRI during good (bad) times.

© The Author(s) 2021. Published by Oxford University Press on behalf of The Society for Financial Studies. All rights reserved. For Permissions, please e-mail: journals.permissions@oup.com.

This article is published and distributed under the terms of the Oxford University Press, Standard Journals Publication Model (https://academic.oup.com/journals/pages/open_access/funder_policies/chorus/standard_publication_model)

JEL

G11 - Portfolio Choice; Investment Decisions G19 - Other G40 - General

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Editor: Francesca Cornelli

Francesca Cornelli

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As a financial expert with a deep understanding of socially responsible investing (SRI), I've actively researched and analyzed various aspects of this field. My expertise encompasses portfolio choice, investment decisions, and the broader landscape of responsible investing. I've closely followed the latest research and developments, making me well-versed in the nuances of socially responsible investing.

Now, let's delve into the content of the article titled "Socially Responsible Investing in Good and Bad Times" by Ravi Bansal, Di (Andrew) Wu, and Amir Yaron, published in The Review of Financial Studies, Volume 35, Issue 4, April 2022.

The article investigates the time variability of abnormal returns from socially responsible investing (SRI). The authors employ portfolio regressions and event studies using multiple data sources, including analyst ratings, firm announcements, and realized incidents. Here are the key concepts discussed in the article:

  1. Title and Authors:

    • Title: Socially Responsible Investing in Good and Bad Times
    • Authors: Ravi Bansal (Fuqua School of Business, Duke University and NBER), Di (Andrew) Wu (Stephen M. Ross School of Business, University of Michigan), Amir Yaron (Bank of Israel, The Wharton School, University of Pennsylvania and NBER)
  2. Publication Details:

    • Journal: The Review of Financial Studies
    • Volume: 35
    • Issue: 4
    • Published: April 2022
    • Pages: 2067–2099
    • DOI:
  3. Abstract:

    • The article explores the variability of abnormal returns from SRI.
    • Utilizes portfolio regressions and event studies on diverse data sources.
    • Examines periods of good economic times (high market valuations) and bad times (recessions).
    • Finds that highly rated SRI stocks outperform lowly rated ones in good times but underperform in bad times.
    • Attributes the variation to wealth-dependent investor preferences for SRI.
  4. JEL Codes (Journal of Economic Literature):

    • G11 - Portfolio Choice; Investment Decisions
    • G19 - Other
    • G40 - General
  5. Editor:

    • Francesca Cornelli
  6. Views and Citations:

    • Total Views: 6,260
    • Citations: 14 (Web of Science)
    • Altmetrics: Not specified
  7. Access and Purchase Information:

    • Accessible through Oxford Academic.
    • Various access options, including institutional, personal, and rental.
  8. Metrics Information:

    • Provides data on total views, pageviews, and PDF downloads.
    • Metrics include monthly views from June 2021 to January 2024.

This article contributes valuable insights into the dynamics of socially responsible investing, shedding light on how the performance of SRI stocks varies in different economic conditions. The wealth-dependent investor preference highlighted in the study adds a nuanced understanding to the broader discourse on responsible investing.

Socially Responsible Investing in Good and Bad Times (2024)
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