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Are ethical investments good?

Author

Listed:
  • Gariet WS Chow

    (The University of Western Australia, Crawley, WA, Australia)

  • Robert B Durand

    (Curtin University, Bentley, WA, Australia)

  • SzeKee Koh

    (Singapore Institute of Technology, Singapore; The University of Western Australia, Crawley, WA, Australia)

Abstract

Our study considers whether ethical investments are also good investments. In contrast with previous studies, we utilize long-run event study methodology to examine abnormal returns associated with firms being included in, and dropped from, the MSCI KLD400 Social Index (MSCI KLD400). We find that there are positive and statistically significant long-run abnormal returns for firms being included in the MSCI KLD400. These abnormal returns are associated with higher shareholdings by institutional investors (who are subject to higher public scrutiny), higher analyst coverage and higher growth opportunities.

Suggested Citation

  • Gariet WS Chow & Robert B Durand & SzeKee Koh, 2014. "Are ethical investments good?," Australian Journal of Management, Australian School of Business, vol. 39(4), pages 645-665, November.
    • Handle: RePEc:sae:ausman:v:39:y:2014:i:4:p:645-665
    DOI: 10.1177/0312896213516327
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    Cited by:

    1. Koh, SzeKee & Durand, Robert B. & Limkriangkrai, Manapon, 2015. "The value of Saints and the price of Sin," Pacific-Basin Finance Journal, Elsevier, vol. 35(PA), pages 56-72.

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    More about this item

    Keywords

    MSCI KLD400 Social Index; portfolio choice; socially responsible investing;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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