This article addresses the growing industry of retail socially responsible investment (SRI) profiled mutual funds. Very few previous studies have examined the final consumer of SRI profiled mutual funds. Therefore, the purpose of this study was to, in an exploratory manner, examine the impact of a number of pro-social, financial performance, and socio-demographic variables on SRI behavior in order to explain why investors choose to invest different proportions of their investment portfolio in SRI profiled funds. An ordinal logistic (...) regression analysis on 528 private investors revealed that two of the three pro-social variables had a positive impact on how much the consumer invested in SRI profiled funds. Moreover, there was proof of a non-altruistic motive for investing in SRI as consumers who perceive that financial return of SRI is equal or better than "regular" mutual funds, invested a greater proportion of their portfolio in SRI profiled mutual funds. Furthermore, the results showed that women and better-educated investors were more likely to invest a greater proportion of their investment portfolio in SRI. Overall, the findings indicate that both financial perceptions and pro-social attitudes are connected to consumer investment in SRI. (shrink)

There is a growing body of literature on ethical or socially responsible investment across a range of disciplines. This paper highlights the key themes in the field and identifies some of the major theoretical and practical challenges facing both scholars and practitioners. One of these challenges is understanding better the complexity of the relationship between such investment practices and corporate behaviour. Noting that ethical investment is seldom characterised by agreement about what it actully constitutes, and that much (...) of the extant research focuses on a narrow set of issues, the paper argues that there are benefits associated with examining ethical investment as a process. (shrink)

Environmental, social, and governance (ESG) investing is synonymous with sustainable investment for socially responsible investors. Unfortunately, the diversity of ESG investing remains unattended amidst the growth in ESG literature, as the academic literature focuses dominantly on measuring performance. An understanding of a wide range of subjects entailing ESG is required before future research on ESG investing is performed. To overcome the challenge, this systematic literature review uses bibliometric mapping to reveal four significant research themes within the ESG investing literature: (...) investor behavior and motivations for ESG investing; cost and risk mitigation in ESG investing; portfolio screening and ESG investing; and ESG performance. The review critically examines each theme and broadens the research agenda for future studies. In addition to the significant themes, this paper also discusses theoretical and recent research trends in the ESG investing literature. The review identifies clashes and crossovers between these themes to appropriately interpret one theme using another and emphasizes the heterogeneity in ESG investing. Lastly, discussion over concerns and criticisms of ESG investing highlights greenwashing as a major cause of concern for investors. (shrink)

>With assets of over US$1.0 trillion and growing, public pension funds in the United States have become a major force in the private sector through their holding of equity positions in large publicly traded corporations. More recently, these funds have been expanding their investment strategy by considering a corporations long-term risks on issues such as environmental protection, sustainability, and good corporate citizenship, and how these factors impact a companys long-term performance. Conventional wisdom argues that the fiduciary responsibility of the (...) pension funds trustees must be solely focused on their beneficiaries and, therefore, their investment criteria must be based strictly on narrowly defined financial measures. It is also asserted that well-established financial measurements of corporate performance already include long-term risk assessment through discounted present value of future flow of earnings. Consequently, all other criteria are contrary to the best interest of the pension funds beneficiaries. In this paper, we assert that, contrary to conventional wisdom, pension funds, and for that matter other mutual funds, must be concerned with the long-term survival and growth of corporations. These measures are generally referred to socially responsible investing (SRI) and when applied to corporations, it is termed socially responsible corporate conduct (SRCC). We demonstrate that current measurement of future risk assessment invariably understates, and quite often completely overlooks, these long-term risks because of the inherent bias towards short-run on the part of financial intermediaries whose compensation depends greatly on short-term results. Furthermore, there is ample evidence to suggest that these intermediaries have been engaging in self-serving practices and thus failing in their duties to serve their clients, i.e. pension funds, best interests. Because of their large holdings in the total market as well as individual companies, these funds cannot easily divest from poorly performing companies without destabilizing the companies stock and overall markets. Hence, they must opt for a strategy of emphasizing investment criteria that encourage companies to take into account long-term aspects of their operations in terms of their impact on environment, sustainability, and community welfare, to name a few. We argue that an exclusionary, and even a primary, focus on short-term financial criteria is no longer a viable option. It also calls for the pension funds to encourage greater transparency and accountability of the entire corporate sector through improved corporate governance. Thus socially responsible investing practices are not merely discretionary and desirable activities; they are a necessary imperative, which both the corporations and public pension funds, and other large institutional holders, will ignore at serious peril to themselves. Finally, the paper considers some of the recent developments where corporations have been responding to these challenges and how their actions might be strengthened through greater disclosure and transparency of corporate activities. It also makes recommendations for the pension funds to support further research in creating new measurement standards that further refine the concept of socially responsible investing as a necessary ingredient of long-term corporate survival and growth in the context of a changing economic, environmental and socio-political dynamic. (shrink)

Interest in the notion of the possible financial sacrifice suffered by socially responsible investment (SRI) fund investors for considering ethical, social and environmental issues in their investment decisions has spawned considerable academic interest in the performance of SRI funds. Both the Australian and international research literature have yielded largely mixed results. However, several of these studies are hampered by methodological problems which can obscure the significance of reported results, such as the use of small sample sizes, inconsistencies in (...) the time frames selected to analyse performance and different modelling frameworks used to estimate investment returns. This study attempts to redress some of these issues by investigating the returns performance of 89 ethical funds in Australia over the period 1986-2005. Using a multi-factor CAPM model [Fama, E. F., and K. R. French (1996) J. Finance 51(1), 55] (which controls for factors such as size, book-to-market value and momentum) we find that ethical funds significantly under-perform the market in Australia, particularly in the most recent 5 years of our sample period (2000-2005). Risk adjusted returns (using Jensen's alpha) indicate that average annual underperformance is around 1.52% in the 2000-2005 period for our sample and .88% over the whole sample period. Our results contrast with many previous studies (both Australian and international), which have not found statistically significant differences in the performance of ethical funds relative to market benchmarks and/or a matched sample of conventional funds. (shrink)

What motivates grandparents to their altruism? We review answers from evolutionary theory, sociology, and economics. Sometimes in direct conflict with each other, these accounts of grandparental investment exist side-by-side, with little or no theoretical integration. They all account for some of the data, and none account for all of it. We call for a more comprehensive theoretical framework of grandparental investment that addresses its proximate and ultimate causes, and its variability due to lineage, values, norms, institutions (e.g., inheritance (...) laws), and social welfare regimes. This framework needs to take into account that the demographic shift to low fecundity and mortality in economically developed countries has profoundly altered basic parameters of grandparental investment. We then turn to the possible impact of grandparental acts of altruism, and examine whether benefits of grandparental care in industrialized societies may manifest in terms of less tangible dimensions, such as the grandchildren's cognitive and verbal ability, mental health, and well-being. Although grandparents in industrialized societies continue to invest substantial amounts of time and money in their grandchildren, we find a paucity of studies investigating the influence that this investment has on grandchildren in low-risk family contexts. Under circumstances of duress there is converging evidence that grandparents can provide support that helps to safeguard their children and grandchildren against adverse risks. We conclude by discussing the role that grandparents could play in what has been referred to as Europe's demographic suicide. (shrink)

Ethical or socially responsible investment is one of the most rapidly growing areas of finance. New government regulations mean that all pension funds are obliged to take such considerations into account. However, this phenomenon has received little critical attention from business ethicists, and a clear conceptual framework is lacking. This paper, by a practitioner in the field, attempts to fill this analytical gap. It considers what difference, if any, lies between the terms ‘ethical’, ‘green’, or ‘socially responsible’. It also (...) tackles the difficult question of how any public form of investment can be called ‘ethical’ in an overtly pluralistic society. The paper provides an account of the historical development of ethical investment, and traces the evolution of the varying terms used to describe it. This is followed by a conceptual analysis of these terms, and a description of ethical decision‐making in this context. The paper ends by considering the role of shareholder action within ethical investment, and assesses the utility of the stakeholder model as a theoretical justification. (shrink)

Ethical investing is all the rage. Unfortunately, excitement about it has outpaced plausible philosophical discussions. This article asks and answers two questions: “What counts as investment?”, and “What moral choices do investors have?”. I answer the first question broadly. Investment is pervasive in our economy, and by participating we share responsibility for corporate practices. These facts lead to an “austere conclusion”: short of outright withdrawal from the standard forms of investment, we have little hope of avoiding participation (...) in immoral activities. Thus we must withdraw. Fortunately, the answer to the second question mitigates this disturbing result. Under certain circumstances, shareholder activism aimed at moral goals is a valuable way to participate in a deeply flawed system. By demonstrating the pervasiveness of investment and analogies with consumption and democratic political participation, the conclusions of this paper illuminate not only the ethics of investment but a more-general problem of individual responsibility in complex institutions. The paper is informative both for its applicability to these latter questions, and for its demonstration that investment is not merely a side-topic for business ethics texts, but rather a central problem of modern market societies. (shrink)

Socially responsible investment (SRI) – sometimes termed “ethical investment” – refers to the practice of integrating social, environmental, or ethical criteria into financial investment decisions. Whereas conventional investment focuses upon financial risk and return from stocks and bonds, SRI includes other goals or constraints. It is the nature of the source, and not just the size, of the financial return that is of concern in SRI. This article introduces the principal investment strategies generally pursued under (...) SRI, and then focuses specifically on the ethical dimension – that is, whether current SRI practices constitute an ethically justified, perhaps even ethically superior, way of investing. (shrink)

Do foreign direct investment (FDI) and international business ventures promote positive social and economic development in emerging nations? This question will always prove contentious. First, the impacts differ according to context. Second, the social consequences and spillover effects of knowledge diffusion and technology-sharing may be limited and hard to measure. Third, contributions to enhancing social responsibility and improving living standards in host countries are delayed in effect, causally complex, and also hard to measure. Outcomes often critically depend on collaboration (...) of governments, international institutions, the business world, and non-governmental organizations (NGOs). Research in this area is challenging and requires interdisciplinary collaboration between economists, financial experts, sociologists, ethicists, and other specialists. This paper explores: (1) the evidence to support the proposition that FDI and international business improve social conditions in less-developed countries, and: (2) how these improvements are linked to strategies of corporate social responsibility (CSR) and ethical business practice. The paper draws insights from development, FDI, poverty alleviation, and bottom-of-the-pyramid (BOP) literature. Applications are demonstrated using examples from poverty-stricken areas of Sub-Saharan Africa. The paper attempts not only to argue theoretically but also to provide practical evidence. The approach is simultaneously descriptive, analytical, and prescriptive in order to address a wide audience. It also highlights issues and trends for further academic research and presents the viewpoint that some limitations lie in the nature of ethics frameworks widely referenced in business and that these often fail to consider the compatibility of ethical constructs with relevant incentives. In this vein, we explore the application of Homann’s framework for advantage and incentive-based ethics. (shrink)

This study examines child survival and growth in a patrilineal Ethiopian community as a function of father absence and sex. In line with evolutionary predictions for sex-biased parental investment, the absence of a father and associated constraints on household resources is more detrimental for sons’ than daughters’ survival in infancy. Father absence doubles a son’s risk of dying in infancy but has a positive influence on the well-being of female members of the household, improving daughter survival, growth, and maternal (...) nutritional status. Lack of paternal investment may be compensated for by other matrilateral kin through increased reciprocity between mother, daughter, and sister. (shrink)

Artificial Intelligence (AI) has become a driving force in modern research, industry and public administration and the European Union (EU) is embracing this technology with a view to creating societal, as well as economic, value. This effort has been shared by EU Member States which were all encouraged to develop their own national AI strategies outlining policies and investment levels. This study focuses on how EU Member States are approaching the promise to develop and use AI for the good (...) of society through the lens of their national AI strategies. In particular, we aim to investigate how European countries are investing in AI and to what extent the stated plans contribute to the good of people and society as a whole. Our contribution consists of three parts: (i) a conceptualization of AI for social good highlighting the role of AI policy, in particular, the one put forward by the European Commission (EC); (ii) a qualitative analysis of 15 European national strategies mapping investment plans and suggesting their relation to the social good (iii) a reflection on the current status of investments in socially good AI and possible steps to move forward. Our study suggests that while European national strategies incorporate money allocations in the sphere of AI for social good (e.g. education), there is a broader variety of underestimated actions (e.g. multidisciplinary approach in STEM curricula and dialogue among stakeholders) that can boost the European commitment to sustainable and responsible AI innovation. (shrink)

With assets of over US$1.0 trillion and growing, public pension funds in the United States have become a major force in the private sector through their holding of equity positions in large publicly traded corporations. More recently, these funds have been expanding their investment strategy by considering a corporation's long-term risks on issues such as environmental protection, sustainability, and good corporate citizenship, and how these factors impact a company's long-term performance. Conventional wisdom argues that the fiduciary responsibility of the (...) pension funds' trustees must be solely focused on their beneficiaries and, therefore, their investment criteria must be based strictly on narrowly defined financial measures. It is also asserted that well-established financial measurements of corporate performance already include long-term risk assessment through discounted present value of future flow of earnings. Consequently, all other criteria are contrary to the best interest of the pension funds' beneficiaries. In this paper, we assert that, contrary to conventional wisdom, pension funds, and for that matter other mutual funds, must be concerned with the long-term survival and growth of corporations. These measures are generally referred to "socially responsible investing" and when applied to corporations, it is termed "socially responsible corporate conduct." We demonstrate that current measurement of future risk assessment invariably understates, and quite often completely overlooks, these long-term risks because of the inherent bias towards short-run on the part of financial intermediaries whose compensation depends greatly on short-term results. Furthermore, there is ample evidence to suggest that these intermediaries have been engaging in self-serving practices and thus failing in their duties to serve their clients', i.e. pension funds', best interests. Because of their large holdings in the total market as well as individual companies, these funds cannot easily divest from poorly performing companies without destabilizing the companies' stock and overall markets. Hence, they must opt for a strategy of emphasizing investment criteria that encourage companies to take into account long-term aspects of their operations in terms of their impact on environment, sustainability, and community welfare, to name a few. We argue that an exclusionary, and even a primary, focus on short-term financial criteria is no longer a viable option. It also calls for the pension funds to encourage greater transparency and accountability of the entire corporate sector through improved corporate governance. Thus socially responsible investing practices are not merely discretionary and desirable activities; they are a necessary imperative, which both the corporations and public pension funds, and other large institutional holders, will ignore at serious peril to themselves. Finally, the paper considers some of the recent developments where corporations have been responding to these challenges and how their actions might be strengthened through greater disclosure and transparency of corporate activities. It also makes recommendations for the pension funds to support further research in creating new measurement standards that further refine the concept of socially responsible investing as a necessary ingredient of long-term corporate survival and growth in the context of a changing economic, environmental and socio-political dynamic. (shrink)

“Ethical investing” is interpreted in the following paper to be the use of non-financial normative criteria by investors in the choice ofsecurities for their portfolios.Ethical investors may aim at fulfilling duties they feel they have, possibly including increasing the amount of good in society through theconsequences of their buying and selling behavior. The main duties are those of not-profiting from bad corporate behavior and of punishing bad firms. The main consequence desired is that managers manage corporations in a more ethical (...) manner. But ethical investors also aim at receiving returns based on the market risk of their investments.If the aim of managers is to maximize shareholder wealth, then ethical investors can fulfill their duties or achieve their desired consequences only if their trading activities affect shareholder wealth, i.e., share price. A theoretical argument is presented to show that this trading activity will not affect share price or return. In addition, reference is made to results of empirical studies which show that ethical stocks yield market returns, i.e., that the share price of ethical firms is unaffected by the actions of ethical investors.If the trading activity of ethical investors fails to affect share price and return, then these investors fail to fulfill any of their goals or to achieve their ends. (shrink)

Post-conflict economies often prove daunting for foreign investors. Many of these nations are reaching out to diasporans, emigrants, and their descendants living abroad, for much-needed foreign investment capital. Little is known about why diasporans invest in their countries of origin. Recent scholarly inquiry regarding investment decision making has suggested that non-pecuniary, psychological concerns often motivate investment decisions. We develop a conceptual model identifying three types of investment return expectations — financial, emotional, and those related to social (...) status — that may drive diaspora investment interest. We contend that the psychological realities and social-status structure of the diaspora experience generate greater salience for non-pecuniary investment motivations, particularly when the origin country emerges from a period of conflict. We outline an agenda for future research and discuss the implications of our model for policies seeking to promote peace utilizing diaspora investment. (shrink)

Several theoretical perspectives have generated research on grandparental investment, notably socialization and evolutionary psychological perspectives. Using data collected from more than 200 older adults (mean age 67 years), we test three hypotheses derived from socialization and evolutionary perspectives about grandparents’ relationships with and investment in grandchildren. Results indicate that (1) emotional closeness with both children and children-in-law is positively related to reports of emotional closeness with grandchildren; (2) maternal grandmothers invest more in grandchildren than do other grandparents; and (...) (3) grandparents invest more in daughters’ children than in sons’ children. Discussion addresses limitations of self-report methodology in this context and situates the current findings within the body of research indicating the existence of psychological mechanisms designed to guide differential nepotism. (shrink)

Can the perception that one’s partner is investing effort generate a sense of commitment to a joint action? To test this, we developed a 2-player version of the classic snake game which became increasingly boring over the course of each round. This enabled us to operationalize commitment in terms of how long participants persisted before pressing a ‘finish’ button to conclude each round. Our results from three experiments reveal that participants persisted longer when they perceived what they believed to be (...) cues of their partner’s effortful contribution. Crucially, this effect was not observed when they knew their partner to be an algorithm, nor when it was their own effort that had been invested. These results support the hypothesis that the perception of a partner’s effort elicits a sense of commitment, leading to increased persistence in the face of a temptation to disengage. (shrink)

This paper examines the different mechanisms used by multinational corporations (MNCs) in Nigeria seeking to make long-term social investments by meeting the critical challenge of improving water provision. Community enterprise – an increasingly common form of social enterprise, which pursues charitable objectives through business activities – may be the most effective mechanism for building local capacity in a sustainable and accountable way. Traditionally, social investments by MNCs have involved either donations to a charity, which then assumes responsibility for delivering social (...) outcomes, or direct management of social investment in-house. These approaches have been criticized, however, for their limited contribution to local capacity building, their focus on short-term outcomes, and the restricted role that they afford to communities. Partnering with community enterprise, provided there is sufficient local capacity to support it, is the most effective mode of governance through which MNCs can manage social investments in developing countries. (shrink)

Can the perception that one’s partner is investing effort generate a sense of commitment to a joint action? To test this, we developed a 2-player version of the classic snake game which became increasingly boring over the course of each round. This enabled us to operationalize commitment in terms of how long participants persisted before pressing a ‘finish’ button to conclude each round. Our results from three experiments reveal that participants persisted longer when they perceived what they believed to be (...) cues of their partner’s effortful contribution. Crucially, this effect was not observed when they knew their partner to be an algorithm, nor when it was their own effort that had been invested. These results support the hypothesis that the perception of a partner’s effort elicits a sense of commitment, leading to increased persistence in the face of a temptation to disengage. (shrink)

“Ethical investing” is interpreted in the following paper to be the use of non-financial normative criteria by investors in the choice ofsecurities for their portfolios.Ethical investors may aim at fulfilling duties they feel they have, possibly including increasing the amount of good in society through theconsequences of their buying and selling behavior. The main duties are those of not-profiting from bad corporate behavior and of punishing bad (or rewarding good) firms. The main consequence desired is that managers manage corporations in (...) a more ethical manner. But ethical investors (as opposed to some other kinds of investors who are also interested in normative issues) also aim at receiving returns based on the market risk of their investments.If the aim of managers is to maximize shareholder wealth, then ethical investors can fulfill their duties or achieve their desired consequences only if their trading activities affect shareholder wealth, i.e., share price. A theoretical argument is presented to show that this trading activity will not affect share price or return. In addition, reference is made to results of empirical studies which show that ethical stocks yield market returns, i.e., that the share price of ethical firms is unaffected by the actions of ethical investors.If the trading activity of ethical investors fails to affect share price and return, then these investors fail to fulfill any of their goals or to achieve their ends. (shrink)

Industrial investment funds are a new financing innovation mode that can build an effective financing channel for enterprises.Based on the panel data of Chinese Listed Companies in 2008–2017, this manuscript constructed a static panel model between industrial investment funds, government R&D subsidies, and technological innovation to empirically analyze the effects of industrial investment fund involvement and government R&D subsidies on companies’ technological innovation. The research shows that industrial investment fund involvement can increase the company’s R&D (...) class='Hi'>investment by providing financial funds for the company, which can effectively solve the company’s lack of funds in the process of technological innovation and guarantee the smooth running of the company’s innovation activities. Secondly, government R&D subsidies can alleviate the pressure of R&D investment to a certain extent, which is conducive to promote a higher level of technological innovation in the company. Thirdly, for companies with industrial investment fund involvement, government R&D subsidies are conducive to promote technological innovation. In contrast, for companies without industrial investment fund involvement, government R&D subsidies have no significant impact on technological innovation to a certain extent or even have a “crowding out effect.”. (shrink)

Ethical investors are widely thought of as having two main goals. The negative goal of avoiding their investments to be morally tainted. The positive goal to further a certain ethical value they embrace or some normatively laden idea they hold by investing their money in a certain company. In light of these goals, the purpose of this paper is to provide an account of how we can explicitly include investors’ intentions when conceiving of ethical investment. The central idea is (...) that an investor’s intentions may act as both a negative and a positive qualifier for making investing ethical. If we subscribe to this account, there are interesting upshots with respect to how ethical investing compares to ethical giving as effective altruists construe it. (shrink)

Critics of investment citizenship often appeal to the idea that citizenship should not be commodified. This chapter clarifies how the different arguments in support of this Commodification Objection are best understood as versions of wider claims in the literature on the moral limits of markets (MLM). Through an analysis of the three main objections – The Wrong Distribution Argument, The Value Degradation Argument, and the Motivational Corruption Argument – it claims that these objections rely on flawed and partial interpretations (...) of the broader debates. As such, they do not in fact support the conclusions critics of investment citizenship wish to draw from them. The paper concludes that the commodification objection to investment citizenship should therefore be abandoned, and that normative resistance to the practice should be made on other grounds. (shrink)

Innovations in aligning investment with sustainability led to impact investing, enabling investors to achieve conventional financial returns and measurable social and environmental returns. Since its inception in 2007, it has grown manifolds, with significant efforts being made to create a global ecosystem. However, due to limited academic literature, the theme is yet to garner the scholarly interest it deserves. In this study, we analyse and visualise a knowledge map of the impact investment research field through a comprehensive bibliometric (...) analysis by employing a research corpus of 421 studies sourced from Web of Science and Scopus. We identify the growth trajectory, geographical concentration, productive and influential authors, journals and significant articles and examine the inter-disciplinarity of the field. The major research themes interlinked with impact investing included; social entrepreneurship, social innovation, social finance, impact investment market, innovative financial instruments, financialisation of essential services and impact reporting. To drive the field forward, future research needs to develop an impact investment ecosystem, address behavioural issues, stakeholder management and institutional context in impact investment theme, develop and diffuse innovative financial instruments, develop a framework for standardised accounting and reporting practices to measure financial and non-financial dimensions, tackle impact washing by fund managers, address lack of financial access to the third sector and develop the legal and regulatory framework for third sector organisations. (shrink)

The effects of grandparental investment in relatives are apparent in human groups, suggesting that a postreproductive period in humans is selective. Although investment of relatives in kin produces obvious benefits for kin groups, selection for a postreproductive period in humans is not supported by evidence from chimpanzees. Instead, grandparental investment is likely a recent phenomenon of longevity, rather than an evolved feature.

This article provides information about Berne's financial situation at the time the Economic Society was founded. The canton was in an exceptionally fortunate position, having accumulated a sizeable cash reserve that was in part used for loans and investments on the London capital market. Throughout the century, the Bernese government followed a very cautious investment strategy. The main reason for purchasing overseas securities was that they helped the patricians to become independent from tax-paying subjects. Economic imperatives ruled out increases (...) of the cash reserve or further involvement in the overcrowded domestic capital market. However, by investing abroad Berne became increasingly dependent on the goodwill of its debtors, for which it was criticised by the Economic Patriots amongst others. (shrink)

Regulation must target the financial sector, which often funds and profits from environmentally unsustainable development. In an era of global financial markets, the financial sector has a crucial impact on the state of the environment. The long-standing movement for ethically and socially responsible investment (SRI) has recently begun to advocate environmental standards for financiers. While this movement is gaining more adherents, it has increasingly justified responsible financing as a path to be prosperous, rather than virtuous. This trend partly owes (...) to how financial institutions view their legal responsibilities. The business case motivations that now predominantly drive SRI are not sufficient to make the financial sector a means to sustainable development. Some modest legal reforms to improve the quality and extent of SRI have yet to make a tangible difference. A more ambitious strategy to promote SRI for environmental sustainability is possible, based on reforming the fiduciary duties of financial institutions. Such duties, tied to concrete performance standards, could make financiers invest in more ethically responsible ways. Other collateral reforms to financial markets, including improved corporate environmental reporting, are required to promote sustainability. (shrink)

Sovereign Wealth Funds have attracted significant attention over the past few years, as a result of their increasing role in the global economy and their controversial minority investments in distressed financial and infrastructure companies in Western economies. Although SWFs provide important benefits to home, host and global markets, they have been perceived by the Western mind as a growing threat to economic supremacy and national security. While the current legal scholarship provides an incomplete policy response, by either selectively referring to (...) specific legal instruments within the international law framework or proposing an entirely new legal regime, this Article attempts to address this crucial lacuna by providing an original and comprehensive legal analysis of the SWF phenomenon and its interaction with the preexisting framework of international law. The various abovementioned concerns have prompted various Western attempts to block SWF cross-border investments through legislative reforms or ad hoc protectionism of the executive branch. These governmental policies frequently violate international commitments in the international economic law arena and call for a closer look at the nature of such commitments and their respective implementation in the SWF environment. The Article looks at recent practices in Western countries aimed at blocking SWF investments, especially in the context of iconic brands and national champions. It then reviews various relevant provisions in international legal instruments, which are applicable to these potential investments, and examines the question of their violation by capital-importing countries. A proposed innovative adaptation to this new reality is provided. I argue that the existing framework of international investment law can provide adequate solutions to investment protectionism against SWFs. Regarding regulation of SWFs’ investments, since recent experience has underlined that SWFs function largely like any other commercial entities, there is a need to shift the discussion and terminology towards regulation of sovereign activity rather than sovereign funds. Finally, the Article explores the broad consequences of investment law and corporate governance reforms following the debate around SWF investments on maintaining healthy and productive cross-border economic relations in a globalized world. (shrink)

Several studies have suggested a matrilateral bias in allomaternal (non-maternal) infant and child caregiving. The bias has been associated with the allomother’s certainty of genetic relatedness, where allomothers with high certainty of genetic relatedness will invest more in children because of potential fitness benefits. Using quantitative behavioral observations collected on Ngandu 8- to 12-month-old infants from the Central African Republic, I examine who is caring for infants and test whether certainty of genetic relatedness may influence investment by allomothers. Results (...) indicate a matrilateral bias in caregiving by extended kin members, but this does not affect the total level of care infants receive when fathers and siblings are included in the analysis. These results replicate a previous study done among an adjacent foraging population and emphasize the importance of examining children’s complete social environments when addressing caregiving and child development. (shrink)

Despite the increase in the acceptance of responsible investing in general, the global community is still witnessing unprecedented levels of practices that can only be categorized as “unsustainable”. It appears, then, that either the inroads made by the RI community have not kept up with the increase in unsustainable practices, or, that the RI process itself has been ineffective at producing meaningful change. The current study aims to investigate the practices used by pension plan sponsors to determine how they may (...) enable, or interfere with, the adoption of implementation of RI. We adopt Framing Theory, specifically the idea that particular frames find alignment when they resonate with their targets, by either bridging, extending, amplifying or transforming a domain. We extend research to include understudied practices by performing an analysis of 60 public pension funds in Canada. We find evidence of disconnect between the financial frame which dominates practices for compliance and evaluation, and the social frame of RI as a source of change. If the aim of RI is to produce long-term change, then a consideration of whether it aligns with extant practices is critical. We discover a variety of frame alignment tactics already employed in practice. We also find that, even within the dominant financial frame, opportunities for frame extension, amplification and transformation do exist, and examine how these are more possible depending on how the asset management structure is designed. (shrink)

Increased concern for the environment has increased the number of investment opportunities in mutual funds specialized in promoting responsible environmental attitudes. This article examines the performance and risk sensitivities of US green mutual funds vis-à-vis their conventional peers. We also analyze and compare this performance relative to other socially responsible investing (SRI) mutual funds. In order to implement this analysis, we apply a CAPM-based methodology and find that in the 1987–2009 period, environ- mental funds had lower performance than conventional (...) funds with similar characteristics. However, if we focus on a more recent period (2001–2009), green funds achieved adjusted returns not significantly different from the rest of SRI and conventional mutual funds. (shrink)

Since the global financial crisis in 2007, social banks have been flooded with deposits. Previous studies have indicated that customers hold deposits with social banks due to social banks' special placement of assets. However, to date it has been far from clear how social banks select their investments, and consequently to what extent the placement of assets meets depositors' preferences. The purpose of this paper is, therefore, to investigate whether the characteristics of social banks’ placement of assets are relevant to (...) depositors’ choice of social banks. A two‐stage study is conducted, using data collected via a document analysis of social banks' investment criteria, a survey of social banks, and an online survey of 609 depositors. The results imply that the characteristics of social banks' placement of assets are indeed relevant to depositors' choice of social banks, but do not explain customer behaviour entirely. Furthermore, the findings indicate that a relevant proportion of customers hold deposits with social banks to avoid “evil” rather than necessarily creating “good.” Based on the findings, a theoretical framework of depositors' choice of social banks is presented that goes far beyond previous explanations by considering various types of social depositors, banks, and borrowers. (shrink)

There appears to be an implicit assumption by those connected with the ethical investment movement (e.g., ethical investment firms, individual investors, social investment organizations, academia, and the media), that ethical investment is in fact ethical. This paper will attempt to challenge the notion that the ethical mutual fund industry, as currently taking place, is acting in an ethical manner. Ethical issues such as the transparency of the funds and advertising are discussed. Ethical mutual fund screens such (...) as tobacco, alcohol, gambling, and the military are preliminarily examined to better determine whether they can actually be defined as "ethical" screens as opposed to merely social, political, or religious screens. A code of ethics for ethical investment is constructed by which ethical mutual fund firms can be audited for ethical compliance. (shrink)

Guardians of companion animals killed wrongfully in the U.S. historically receive compensatory judgments reflecting the animal’s economic value. As animals are property in torts law, this value typically is the animal’s fair market value—which is often zero. But this is only the animal’s value, as it were, to a stranger and, in light of the fact that many guardians value their animals at rates far in excess of fair market value, legislatures and courts have begun to recognize a second value, (...) the animal’s value to her guardian. What is this noneconomic value, and how should guardians be compensated for it? In Part 1, I propose a novel method to answer this question. My method includes a third, even more controversial, value: the animal’s value to herself. The idea that an animal could invest in herself faces many criticisms. In Part 2, I defend the claim by examining the mental capacities of dogs (Canis familiaris). I rebut the central objection—that dogs lack the psychological capacities required for self-investment—by showing that dogs are autonomous, think about their futures, and inhibit their desires in light of their goals. I close by suggesting that whereas the approach has conservative implications for the valuation of companion animals, it has radical implications for the valuation of agricultural animals. -/- Keywords: companion animals, animal law, legal theory, value theory, practical ethics, economic value, noneconomic value, intrinsic value, instrumental value, animal welfare, dogs, animal rights, capital value, self-investment value, autonomy, wrongful death, philosophy of animal law, animal minds, moral standing of animals, legal standing of animals, agency, prospection, canine neurobiology, bereavement, replaceability, non-ideal ethics . (shrink)

Socially responsible investing (SRI) has emerged in recent years as a dynamic and quickly growing segment of the U.S. financial services industry involving over $2 trillion in professionally managed assets. Its conceptual origins can be found in the early history of civilization, with it's modern roots in the 1960s. This paper provides an overview of the breadth and depth of the concept and practice of socially and environmentally responsible investing, describes the investment strategies that together define SRI as currently (...) practiced in the U.S., offers several observations about some of the factors fueling its dramatic growth, and presents data showing that investors who choose to invest in a socially and environmentally responsible manner can do so without giving up investment returns. SRI has matured to a point where virtually any investment need can be met through portfolio design that integrates an investor's personal values, institutional mission, and/or social priorities. The socially responsible investment industry in the United States is a young phenomenon. Even referring to it as an "industry" ten years ago may have been a bit of a stretch. While it has grown dramatically in recent years, it is an area of work, of study and of practical application that continues to evolve in many significant ways. One intriguing example of the ongoing development of the field can be found in the analysis of the language used to describe it. The terms social investing, socially responsible investing, ethical investing, socially aware investing, socially conscious investing, green investing, values-based investing, and mission-based or mission-related investing all refer to the same general process and are often used interchangeably. (shrink)

Namesaking can be viewed as a mechanism to increase perceived parent-child similarity and, consequently, parental investment. Male and, to a lesser extent, firstborn children are more frequently namesakes than female and later-born children, respectively. However, a direct link between namesaking and parental investment has not been examined. In the present study, 632 participants from Central Europe indicated their first name, sex, birth order, number of siblings, sexual orientation, socioeconomic status, paternal and maternal first names, as well as relationship (...) quality with, and time and financial investment they received from, both parents during childhood. Mixed-effects models revealed associations between namesaking and parental investment. However, the effect of namesaking often appeared significant only in interaction with specific predictors, such as sex and primogeniture. It suggests instead that namesaking has an additive effect—it enhances the effect of biological factors on parental investment. In general, we found evidence for the bias in parental investment linked to name similarity among both parents, and support for the hypothesis that namesaking serves as a mechanism to increase paternity confidence and, thus, paternal investment. The effect of namesaking influences only certain types of parental investment—namely, those at the level of relationship quality. In addition, nonheterosexual orientation was the strongest negative predictor of paternal investment. Our study extends the research on parental investment by showing that cultural mechanisms, such as namesaking, can also exert some influence on parental rearing behavior. (shrink)

Investment Science, Second Edition, provides thorough and highly accessible mathematical coverage of the fundamental topics of intermediate investments, including fixed-income securities, capital asset pricing theory, derivatives, and innovations in optimal portfolio growth and valuation of multi-period risky investments. Eminent scholar and teacher David G. Luenberger, known for his ability to make complex ideas simple, presents essential ideas of investments and their applications, offering students the most comprehensive treatment of the subject available. New to this edition Three new chapters: Risk (...) Management, Credit Risk, and Data and Statistics Updated content and expanded coverage of many topics, including the capital asset pricing model, projection pricing, the Black-Scholes equation, computational methods, real options, the characterization of volatility, parameter estimation, and portfolio design New exercises reflecting advances in theory and practice provide opportunities to explore a wide range of concepts. (shrink)

The legal regime regulating cross-border investment gives key rights to foreign investors and places significant duties on states hosting that investment. It also raises distinctive moral questions due to its potential to constrain a state’s ability to manage its economy and protect its people. Yet international investment law remains virtually untouched as a subject of philosophical inquiry. The questions of international political morality surrounding investment rules can be mapped through the lens of two critiques of the (...) law – that it systemically takes advantage of the global South and that it constrains the policy choices of states hosting investment. Each critique contains certain moral and empirical assumptions that deserve further attention. The distributive justice implications of international investment rules are also relevant to scholars of global distributive justice. The aim of the analysis is to develop an interdisciplinary agenda – among law, philosophy, and social science – for inquiry into the justice of investment law and reform of its unjust elements. (shrink)

Although trust and reciprocity are ubiquitous in social exchange, their neurobiological substrate remains largely unknown. Here, we investigated the effect of damage to the ventromedial prefrontal cortex (vmPFC)—a brain region critical for valuing social information—on individuals’ decisions in a trust game and in a risk game. In the trust game, one player, the investor, is endowed with a sum of money, which she can keep or invest. The amount she decides to invest is tripled and sent to the other player, (...) the trustee, who then decides what fraction to return to the investor. In separate runs, ten patients with focal bilateral damage to the vmPFC and control participants made decision while playing in the role of either investor or trustee with different anonymous counterparts in each run. A risk game was also included in which the investor faced exactly the same decisions as in the trust game, but a random device (i.e., a computer), not another player, determined the final payoffs. Results showed that vmPFC patients’ investments were not modulated by the type of opponent player (e.g., human vs. computer) present in the environment. Thus, vmPFC patients showed comparable risk-taking preferences both in social (trust game) and nonsocial (risk game) contexts. In stark contrast, control participants were less willing to take risk and invest when they believed that they were interacting with people than a computer. Furthermore, when acted as trustee, vmPFC patients made lower back transfers toward investors, thereby showing less reciprocity behavior. Taken together, these results indicate that social valuation and emotion subserved by vmPFC have a critical role in trusting and reciprocity decisions. The present findings support the hypothesis that vmPFC damage may impair affective systems specifically designed for mediating social transaction with other individuals. (shrink)

The activism of institutional investors tends more and more toward the supervision and control of the behavior of the managers of big companies. In this article, we present a model based on the creation of an activism index that lets us evaluate such activism's effect on the sensitivity of the investment policies of a company in the face of financial variables and market variables. To test our assertions, we analyze firm-level data for United Kingdom, Germany, France, Denmark, and Spain (...) during the period 1995-2004. Our results point to a significant reduction in the sensitivity of company investment decisions in the face of these variables, especially relative to intangible capital, as a result of the neutralizing effect of activism on the high agency costs of free cash flow and on the information asymmetries of the market. (shrink)

The activism of institutional investors tends more and more toward the supervision and control of the behavior of the managers of big companies. In this article, we present a model based on the creation of an activism index that lets us evaluate such activism's effect on the sensitivity of the investment policies of a company in the face of financial variables and market variables . To test our assertions, we analyze firm-level data for United Kingdom , Germany, France, Denmark, (...) and Spain during the period 1995-2004. Our results point to a significant reduction in the sensitivity of company investment decisions in the face of these variables, especially relative to intangible capital, as a result of the neutralizing effect of activism on the high agency costs of free cash flow and on the information asymmetries of the market. (shrink)

The activism of institutional investors tends more and more toward the supervision and control of the behavior of the managers of big companies. In this article, we present a model based on the creation of an activism index that lets us evaluate such activism’s effect on the sensitivity of the investment policies of a company in the face of financial variables (such as cash flow and liquidity ratio) and market variables (ownership concentration and value creation index). To test our (...) assertions, we analyze firm-level data for United Kingdom (U.K.), Germany, France, Denmark, and Spain during the period 1995–2004. Our results point to a significant reduction in the sensitivity of company investment decisions in the face of these variables, especially relative to intangible capital, as a result of the neutralizing effect of activism on the high agency costs of free cash flow and on the information asymmetries of the market. (shrink)

Social investing, though not yet fully mainstream, has the potential to obtain such status. Questions relating to the future of social investing include the following. (1) What properly falls within the ambit of social investing? Assuming that no single definition of social responsibility is feasible, what then are the limits? (2) What do we need to know about investor psychology concerning social investing? What motivates people to buy socially screened investments and why do they sometimes act inconsistently? (3) How can (...) we improve the measures of social performance? Is it possible to develop GAAP and GAAS equivalents for social reporting? (4) Should social reports by firms be audited? If so, how? (5) What sorts of public policies are necessary to support the social screening of investments? (shrink)

This article studies institutional investor allocations to the socially responsible asset class. We propose two elements influence socially responsible institutional investment in private equity: internal organizational structure, and internationalization. We study socially responsible investments from Dutch institutional investments into private equity funds, and compare socially responsible investment across different asset classes and different types of institutional investors (banks, insurance companies, and pension funds). The data indicate socially responsible investment in private equity is 40–50% more common when the (...) decision to implement such an investment plan is centralised with a single chief investment officer. Socially responsible investment in private equity is also more common among institutional investors with a greater international investment focus, and less common among fund-of-fund private equity investments. (shrink)