Skip to main content

2021 | OriginalPaper | Buchkapitel

8. Investing Ethical: Harder Than You Think

verfasst von : Hans-Peter Burghof, Marcel Gehrung

Erschienen in: Ethical Discourse in Finance

Verlag: Springer International Publishing

Aktivieren Sie unsere intelligente Suche um passende Fachinhalte oder Patente zu finden.

search-config
loading …

Abstract

In this chapter, the authors use fundamental insights of modern capital market theory to find out if, and under which conditions, ethical investments can be expected to generate economic effects in line with ethical investors’ intentions. The authors distinguish between three different forms of ethical investments: direct investments, the use of specialised intermediaries, and market investments through, e.g., ethical funds. With regard to market investments, ethical investments should have no direct impact if they do not change the price of capital. Some authors assume that ethical investments should outperform the market, as the criteria depicts an unpriced risk factor. Others state that ethical investments should underperform the market, as investors are willing to support the respective projects with cheap capital. The main tenor of the empirical results on the topic is that both are wrong: the high degree of market perfection neutralises the good intentions of ethical investors. Thus, to have a direct impact, ethical investors must employ different and, presumably, costlier means.

Sie haben noch keine Lizenz? Dann Informieren Sie sich jetzt über unsere Produkte:

Springer Professional "Wirtschaft+Technik"

Online-Abonnement

Mit Springer Professional "Wirtschaft+Technik" erhalten Sie Zugriff auf:

  • über 102.000 Bücher
  • über 537 Zeitschriften

aus folgenden Fachgebieten:

  • Automobil + Motoren
  • Bauwesen + Immobilien
  • Business IT + Informatik
  • Elektrotechnik + Elektronik
  • Energie + Nachhaltigkeit
  • Finance + Banking
  • Management + Führung
  • Marketing + Vertrieb
  • Maschinenbau + Werkstoffe
  • Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

Springer Professional "Wirtschaft"

Online-Abonnement

Mit Springer Professional "Wirtschaft" erhalten Sie Zugriff auf:

  • über 67.000 Bücher
  • über 340 Zeitschriften

aus folgenden Fachgebieten:

  • Bauwesen + Immobilien
  • Business IT + Informatik
  • Finance + Banking
  • Management + Führung
  • Marketing + Vertrieb
  • Versicherung + Risiko




Jetzt Wissensvorsprung sichern!

Fußnoten
1
See Kempf and Osthoff (2007, p. 908), The Forum for Sustainable and Responsible Investment (2018).
 
2
See Pronina and Freke (2019).
 
3
See Hillier et al. (2012).
 
4
See the unpleasant example of the “Noa bank” in Germany that failed in 2010.
 
5
See Chatterji et al. (2016) and Berg et al. (2019).
 
6
See, e.g., Hoepner and Schopohl (2018), Renneboog et al. (2008), and Karpf and Mandel (2018).
 
7
See European Commission (2019), Pronina and Freke (2019) or Chatterji et al. (2016).
 
8
An example are sin stocks (companies with business operations in tobacco, alcohol, defence or gambling). For more details, see, e.g., Hong and Kacperczyk (2009) or Kempf and Osthoff (2007).
 
9
See Choi et al. (2020).
 
10
See Baker et al. (2018, pp.13–15 and 21–23). See also Fama and French (2007) and Bollen (2007).
 
11
See Andreoni (1989).
 
12
See Baker et al. (2018).
 
13
E.g., Kempf and Osthoff (2007) find positive abnormal returns for portfolios that employ SRI-screens of up to 8.7%.
 
14
In line with this reasoning, Hong and Kacperczyk (2009) find that sin stocks have less institutional ownership.
 
15
See the respective empirical results in Renneboog et al. (2011).
 
16
Full efficiency would be achieved if insider information would also be reflected in the prices. However, the benchmark for today’s regulation of financial markets is to implement semi-strong efficiency, as insiders are not allowed to trade on their information.
 
17
An extensive overview of market anomalies can be found in Novy-Marx and Velikov (2016).
 
18
See Fama and French (2007).
 
19
See Mallin et al. (1995) and Luther et al. (1992).
 
20
See Kreander et al. (2005) and Kreander et al. (2002).
 
21
See Schröder (2004) and Utz and Wimmer (2014).
 
22
See Bauer et al. (2007).
 
23
See Hoepner and Schopohl (2018).
 
24
On them accuracy of conventional ratings in the context of the subprime crisis see, e.g., Keys et al. (2010).
 
25
See Berg et al. (2019).
 
Literatur
Zurück zum Zitat Andreoni, J. (1989). Giving with impure altruism: Applications to charity and Ricardian equivalence. Journal of Political Economy, 97(6), 1447–1458. CrossRef Andreoni, J. (1989). Giving with impure altruism: Applications to charity and Ricardian equivalence. Journal of Political Economy, 97(6), 1447–1458. CrossRef
Zurück zum Zitat Baker, M. P., Bergstresser, D. B., Serafeim, G., & Wurgler, J. A. (2018). Financing the response to climate change: The pricing and ownership of U.S. green bonds(NBER Working Paper). Baker, M. P., Bergstresser, D. B., Serafeim, G., & Wurgler, J. A. (2018). Financing the response to climate change: The pricing and ownership of U.S. green bonds(NBER Working Paper).
Zurück zum Zitat Bauer, R., Koedijk, K., & Otten, R. (2005). International evidence on ethical mutual fund performance and investment style. Journal of Banking & Finance, 29(7), 1751–1767. CrossRef Bauer, R., Koedijk, K., & Otten, R. (2005). International evidence on ethical mutual fund performance and investment style. Journal of Banking & Finance, 29(7), 1751–1767. CrossRef
Zurück zum Zitat Bauer, R., Derwall, J., & Otten, R. (2007). The ethical mutual fund performance debate: New evidence from Canada. Journal of Business Ethics, 70(2), 111–124. CrossRef Bauer, R., Derwall, J., & Otten, R. (2007). The ethical mutual fund performance debate: New evidence from Canada. Journal of Business Ethics, 70(2), 111–124. CrossRef
Zurück zum Zitat Berg, F., Kölbel, J., & Rigobon, R. (2019). Aggregate confusion: The divergence of ESG ratings(MIT Sloan Research Paper). 5822–5819. Berg, F., Kölbel, J., & Rigobon, R. (2019). Aggregate confusion: The divergence of ESG ratings(MIT Sloan Research Paper). 5822–5819.
Zurück zum Zitat Biehl, C. F., & Hoepner, A. G. F. (2010). SRI funds: Does more social mean less financial performance? Biehl, C. F., & Hoepner, A. G. F. (2010). SRI funds: Does more social mean less financial performance?
Zurück zum Zitat Bollen, N. P. B. (2007). Mutual fund attributes and investor behavior. Journal of Financial and Quantitative Analysis, 42(3), 683–708. CrossRef Bollen, N. P. B. (2007). Mutual fund attributes and investor behavior. Journal of Financial and Quantitative Analysis, 42(3), 683–708. CrossRef
Zurück zum Zitat Chatterji, A. K., Durand, R., Levine, D. I., & Touboul, S. (2016). Do ratings of firms converge? Implications for managers, investors and strategy researchers. Strategic Management Journal, 37(8), 1597–1614. CrossRef Chatterji, A. K., Durand, R., Levine, D. I., & Touboul, S. (2016). Do ratings of firms converge? Implications for managers, investors and strategy researchers. Strategic Management Journal, 37(8), 1597–1614. CrossRef
Zurück zum Zitat Choi, D., Gao, Z., & Jiang, W. (2020). Attention to global warming. Review of Financial Studies, 33(3), 1112–1145. CrossRef Choi, D., Gao, Z., & Jiang, W. (2020). Attention to global warming. Review of Financial Studies, 33(3), 1112–1145. CrossRef
Zurück zum Zitat Diamond, D. W. (1984). Financial intermediation and delegated monitoring. The Review of Economic Studies, 51(3), 393–414. CrossRef Diamond, D. W. (1984). Financial intermediation and delegated monitoring. The Review of Economic Studies, 51(3), 393–414. CrossRef
Zurück zum Zitat Fama, E. F. (1970). Efficient capital markets: A review of theory and empirical work. The Journal of Finance, 25(2), 383–417. CrossRef Fama, E. F. (1970). Efficient capital markets: A review of theory and empirical work. The Journal of Finance, 25(2), 383–417. CrossRef
Zurück zum Zitat Fama, E. F., & French, K. R. (2007). Disagreement, tastes, and asset prices. Journal of Financial Economics, 83(3), 667–689. CrossRef Fama, E. F., & French, K. R. (2007). Disagreement, tastes, and asset prices. Journal of Financial Economics, 83(3), 667–689. CrossRef
Zurück zum Zitat Flammer, C. (2018). Corporate green bonds(SSRN Working Paper). Flammer, C. (2018). Corporate green bonds(SSRN Working Paper).
Zurück zum Zitat Galema, R., Plantinga, A., & Scholtens, B. (2008). The stocks at stake: Return and risk in socially responsible investment. Journal of Banking & Finance, 32(12), 2646–2654. CrossRef Galema, R., Plantinga, A., & Scholtens, B. (2008). The stocks at stake: Return and risk in socially responsible investment. Journal of Banking & Finance, 32(12), 2646–2654. CrossRef
Zurück zum Zitat Hillier, D., Grinblatt, M., & Titman, S. (2012). Financial markets and corporate strategy (2nd ed.). McGraw-Hill. Hillier, D., Grinblatt, M., & Titman, S. (2012). Financial markets and corporate strategy (2nd ed.). McGraw-Hill.
Zurück zum Zitat Hong, H., & Kacperczyk, M. (2009). The price of sin: The effects of social norms on markets. Journal of Financial Economics, 93(1), 15–36. CrossRef Hong, H., & Kacperczyk, M. (2009). The price of sin: The effects of social norms on markets. Journal of Financial Economics, 93(1), 15–36. CrossRef
Zurück zum Zitat Hoepner, A. G. F., & Schopohl, L. (2018). On the price of morals in markets: An empirical study of the Swedish AP-Funds and the Norwegian Government Pension Fund. Journal of Business Ethics, 151(3), 665–692. CrossRef Hoepner, A. G. F., & Schopohl, L. (2018). On the price of morals in markets: An empirical study of the Swedish AP-Funds and the Norwegian Government Pension Fund. Journal of Business Ethics, 151(3), 665–692. CrossRef
Zurück zum Zitat Humphrey, J. E., & Tan, D. T. (2014). Does it really hurt to be responsible? Journal of Business Ethics, 122(3), 375–386. CrossRef Humphrey, J. E., & Tan, D. T. (2014). Does it really hurt to be responsible? Journal of Business Ethics, 122(3), 375–386. CrossRef
Zurück zum Zitat In, S. Y., Park, K. Y., & Monk, A. (2017). Is ‘Being Green’ rewarded in the market? An empirical investigation of decarbonization risk and stock returns.  International Association for Energy Economics (Singapore Issue), 46–48. In, S. Y., Park, K. Y., & Monk, A. (2017). Is ‘Being Green’ rewarded in the market? An empirical investigation of decarbonization risk and stock returns.  International Association for Energy Economics (Singapore Issue), 46–48.
Zurück zum Zitat Karpf, A., & Mandel, A. (2018). The changing value of the ‘green’ label on the US municipal bond market. Nature Climate Change, 8(2), 161–165. CrossRef Karpf, A., & Mandel, A. (2018). The changing value of the ‘green’ label on the US municipal bond market. Nature Climate Change, 8(2), 161–165. CrossRef
Zurück zum Zitat Kempf, A., & Osthoff, P. (2007). The effect of socially responsible investing on portfolio performance. European Financial Management, 13(5), 908–922. CrossRef Kempf, A., & Osthoff, P. (2007). The effect of socially responsible investing on portfolio performance. European Financial Management, 13(5), 908–922. CrossRef
Zurück zum Zitat Keys, B. J., Mukherjee, T., Seru, A., & Vig, V. (2010). Did securitization lead to lax screening? Evidence from subprime loans. The Quarterly Journal of Economics, 125(1), 307–362. CrossRef Keys, B. J., Mukherjee, T., Seru, A., & Vig, V. (2010). Did securitization lead to lax screening? Evidence from subprime loans. The Quarterly Journal of Economics, 125(1), 307–362. CrossRef
Zurück zum Zitat Kreander, N., Gray, R. H., Power, D. M., & Sinclair, C. D. (2002). The financial performance of European ethical funds 1996–1998. Journal of Accounting and Finance, 1(3). Kreander, N., Gray, R. H., Power, D. M., & Sinclair, C. D. (2002). The financial performance of European ethical funds 1996–1998. Journal of Accounting and Finance, 1(3).
Zurück zum Zitat Kreander, N., Gray, R. H., Power, D. M., & Sinclair, C. D. (2005). Evaluating the performance of ethical and non-ethical funds: A matched pair analysis. Journal of Business Finance & Accounting, 32(7–8), 1465–1493. CrossRef Kreander, N., Gray, R. H., Power, D. M., & Sinclair, C. D. (2005). Evaluating the performance of ethical and non-ethical funds: A matched pair analysis. Journal of Business Finance & Accounting, 32(7–8), 1465–1493. CrossRef
Zurück zum Zitat Lins, K. V., Servaes, H., & Tamayo, A. (2017). Social capital, trust, and firm performance: The value of corporate social responsibility during the financial crisis. The Journal of Finance, 72(4), 1785–1824. CrossRef Lins, K. V., Servaes, H., & Tamayo, A. (2017). Social capital, trust, and firm performance: The value of corporate social responsibility during the financial crisis. The Journal of Finance, 72(4), 1785–1824. CrossRef
Zurück zum Zitat Luther, R. G., Matatko, J., Corner, D. C. (1992). The investment performance of UK ‘Ethical’ unit trusts. Accounting, Auditing & Accountability Journal, 5 (4). Luther, R. G., Matatko, J., Corner, D. C. (1992). The investment performance of UK ‘Ethical’ unit trusts. Accounting, Auditing & Accountability Journal, 5 (4).
Zurück zum Zitat Mallin, C. A., Saadouni, B., & Briston, R. J. (1995). The financial performance of ethical investment funds. Journal of Business Finance & Accounting, 22(4), 483–496. CrossRef Mallin, C. A., Saadouni, B., & Briston, R. J. (1995). The financial performance of ethical investment funds. Journal of Business Finance & Accounting, 22(4), 483–496. CrossRef
Zurück zum Zitat Martin, P. R., & Moser, D. V. (2016). Managers’ green investment disclosures and investors’ reaction. Journal of Accounting and Economics, 61(1), 239–254. CrossRef Martin, P. R., & Moser, D. V. (2016). Managers’ green investment disclosures and investors’ reaction. Journal of Accounting and Economics, 61(1), 239–254. CrossRef
Zurück zum Zitat Merton, R. C. (1987). A simple model of capital market equilibrium with incomplete information. The Journal of Finance, 42(3), 483–510. CrossRef Merton, R. C. (1987). A simple model of capital market equilibrium with incomplete information. The Journal of Finance, 42(3), 483–510. CrossRef
Zurück zum Zitat Mueller, S. A. (1991). The opportunity cost of discipleship: Ethical mutual funds and their returns. Sociology of Religion, 52(1), 111–124. Mueller, S. A. (1991). The opportunity cost of discipleship: Ethical mutual funds and their returns. Sociology of Religion, 52(1), 111–124.
Zurück zum Zitat Novy-Marx, R., & Velikov, M. (2016). A taxonomy of anomalies and their trading costs. The Review of Financial Studies, 29(1), 104–147. CrossRef Novy-Marx, R., & Velikov, M. (2016). A taxonomy of anomalies and their trading costs. The Review of Financial Studies, 29(1), 104–147. CrossRef
Zurück zum Zitat Renneboog, L., Horst, J. T., & Zhang, C. (2008). Socially responsible investments: Institutional aspects, performance, and investor behavior. Journal of Banking & Finance, 32(9), 1723–1742. CrossRef Renneboog, L., Horst, J. T., & Zhang, C. (2008). Socially responsible investments: Institutional aspects, performance, and investor behavior. Journal of Banking & Finance, 32(9), 1723–1742. CrossRef
Zurück zum Zitat Renneboog, L., Horst, J. T., & Zhang, C. (2011). Is ethical money financially smart? Nonfinancial attributes and money flows of socially responsible investment funds. Journal of Financial Intermediation, 20(4), 562–588. CrossRef Renneboog, L., Horst, J. T., & Zhang, C. (2011). Is ethical money financially smart? Nonfinancial attributes and money flows of socially responsible investment funds. Journal of Financial Intermediation, 20(4), 562–588. CrossRef
Zurück zum Zitat Schröder, M. (2004). The performance of socially responsible investments: Investment funds and indices. Financial Markets and Portfolio Management, 18(2), 122. Schröder, M. (2004). The performance of socially responsible investments: Investment funds and indices. Financial Markets and Portfolio Management, 18(2), 122.
Zurück zum Zitat Utz, S., & Wimmer, M. (2014). Are they any good at all? A financial and ethical analysis of socially responsible mutual funds. Journal of Asset Management, 15(1), 72–82. CrossRef Utz, S., & Wimmer, M. (2014). Are they any good at all? A financial and ethical analysis of socially responsible mutual funds. Journal of Asset Management, 15(1), 72–82. CrossRef
Zurück zum Zitat Zerbib, O. D. (2019). The effect of pro-environmental preferences on bond prices: Evidence from green bonds. Journal of Banking & Finance, 98, 39–60. CrossRef Zerbib, O. D. (2019). The effect of pro-environmental preferences on bond prices: Evidence from green bonds. Journal of Banking & Finance, 98, 39–60. CrossRef
Metadaten
Titel
Investing Ethical: Harder Than You Think
verfasst von
Hans-Peter Burghof
Marcel Gehrung
Copyright-Jahr
2021
DOI
https://doi.org/10.1007/978-3-030-81596-7_8