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Socially Conscious Investors Mitigating Stock Market Losses in A Time of Crisis: Evidence from the COVID-19 Crash

Author

Listed:
  • Ruoke Yang

    (Imperial College Business School, Imperial College London, London SW7 2AZ, UK2U.S. Securities and Exchange Commission, Washington, DC 20549, USA)

  • Iva Koci

    (Imperial College Business School, Imperial College London, London SW7 2AZ, UK3King’s Business School, King’s College London, London WC2R 2LS, UK)

Abstract

Recent years have witnessed a surge in investors with a socially responsible investment mandate. We study stock returns associated with this practice in the COVID-19 crash and surrounding months. Stocks with greater socially responsible investor demand experience superior returns, lower volatility, and weaker market valuation decline during the crash. These effects disappear post-crash. No differences are found with respect to sales, gross profitability, and operating income as well as expectations about the long-term growth rate of earnings per share. These results suggest that socially responsible investors can act as a moderating force by mitigating losses in a time of crisis.

Suggested Citation

  • Ruoke Yang & Iva Koci, 2025. "Socially Conscious Investors Mitigating Stock Market Losses in A Time of Crisis: Evidence from the COVID-19 Crash," Quarterly Journal of Finance (QJF), World Scientific Publishing Co. Pte. Ltd., vol. 15(01), pages 1-39, March.
    • Handle: RePEc:wsi:qjfxxx:v:15:y:2025:i:01:n:s2010139225500016
    DOI: 10.1142/S2010139225500016
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    Keywords

    Pandemic; COVID-19; socially responsible investing;
    All these keywords.

    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
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

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