Sustainable institutional investment in the COVID-19 pandemic

Lai T Hoang and Joey Wenling Yang

Australian Journal of Management, 2023, vol. 48, issue 1, 3-37

Abstract: This article examines institutions’ investment strategies towards environmental and social (E&S) stocks in the first quarter of 2020, coinciding with the COVID-19 pandemic outbreak. Backed with both institutional- and firm-level analyses, we find that institutional investors shift towards stocks with higher E&S performance. The high E&S portfolios exhibit lower risk and return characteristics, outperforming (underperforming) their peers on market-down (-up) days. Further analysis shows this shift towards E&S is not a permanent transition, rather it reversed with the market rebound in the second quarter, thereby suggesting that the underlying driver of institutional E&S investment strategy in the pandemic is downside-risk protection. JEL Classification: G01, G12, G23, M14

Keywords: Abnormal return; COVID-19; downside risk mitigation; E&S; institutional investors; institutional ownership; pandemic (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:sae:ausman:v:48:y:2023:i:1:p:3-37

DOI: 10.1177/03128962221078943

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