Saints versus Sinners. Does morality matter?

Robert B. Durand, SzeKee Koh and Manapon Limkriangkrai

Journal of International Financial Markets, Institutions and Money, 2013, vol. 24, issue C, 166-183

Abstract: Social norms constrain investors from investing in “sin stocks”, affecting the returns and corporate financial policies of such firms (Hong and Kacperczyk, 2009). This paper finds that “Saints” are influenced by social norms. In almost all instances, where an effect on “Sinners” is positive (negative), we find that the effect for ‘Saints’ is negative (positive). Hong and Kacperczyk provide evidence that social norms prevent ‘evil’ outcomes. This paper finds that social norms exert positive pressure on both investors and firms in the US equity market.

Keywords: Asset pricing; Portfolio choice; Socially responsible investing; MSCI KLD400 Social Index (search for similar items in EconPapers)
JEL-codes: G11 G12 G32 M14 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (25)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:intfin:v:24:y:2013:i:c:p:166-183

DOI: 10.1016/j.intfin.2012.12.002

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