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Religion and returns in Europe


  • Salaber, Julie


Drawing on social identity and social impact theory, this paper is the first to investigate the impact of religious preferences on share prices and expected returns at the country level. Using data from 12 European countries, our findings suggest that religion has a significant effect on the share price of companies whose activities are considered unethical, i.e., tobacco manufacturers and alcohol producers. The share price of these companies (called sin stocks) is depressed when they are located in a predominantly Protestant environment (relative to a Catholic environment). With investors in Protestant countries being more sin averse than in Catholic countries, they insist upon higher expected returns on sin stocks. Conversely, religious preferences do not have the same impact on the performance of other companies, e.g. socially responsible companies. Our results are robust to various methodologies and controlling for several firm-specific, industry-specific and country-specific characteristics.

Suggested Citation

  • Salaber, Julie, 2013. "Religion and returns in Europe," European Journal of Political Economy, Elsevier, vol. 32(C), pages 149-160.
  • Handle: RePEc:eee:poleco:v:32:y:2013:i:c:p:149-160
    DOI: 10.1016/j.ejpoleco.2013.07.002

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    References listed on IDEAS

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    Cited by:

    1. Gunnar Gutsche & Bernhard Zwergel, 2016. "Information barriers and SRI market participation – Can sustainability and transparency labels help?," MAGKS Papers on Economics 201624, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    2. Borgers, Arian & Derwall, Jeroen & Koedijk, Kees & ter Horst, Jenke, 2015. "Do Social Factors Influence Investment Behaviour and Performance? Evidence from Mutual Fund Holdings," CEPR Discussion Papers 10740, C.E.P.R. Discussion Papers.
    3. Pieter Jan Trinks & Bert Scholtens, 2017. "The Opportunity Cost of Negative Screening in Socially Responsible Investing," Journal of Business Ethics, Springer, vol. 140(2), pages 193-208, January.
    4. Gunnar Gutsche & Anja Köbrich León & Andreas Ziegler, 2016. "On the relevance of psychological motives, values, and norms for socially responsible investments: An econometric analysis," MAGKS Papers on Economics 201641, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    5. Borgers, Arian & Derwall, Jeroen & Koedijk, Kees & ter Horst, Jenke, 2015. "Do social factors influence investment behavior and performance? Evidence from mutual fund holdings," Journal of Banking & Finance, Elsevier, vol. 60(C), pages 112-126.

    More about this item


    Financial performance; Religious preferences; Sin stock premium; Social identity; Social responsibility;

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • Z12 - Other Special Topics - - Cultural Economics - - - Religion


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