The increasing popularity of socially responsible investment among individual investors throughout Europe reveals the need for a framework that allows the comparison of socially responsible retail markets in different European countries. This article proposes such a framework, containing 16 different characteristics of socially responsible retail markets describing the size, institutionalization and nature of this market and correcting for differences in the size of countries and financial markets. When this framework was applied to the Dutch and Belgian socially responsible retail markets, (...) differences were found with respect to the nature of both markets. Similarities were found with respect to the size and the degree of institutionalization of the socially responsible retail markets. (shrink)

Many writers have commented on the heterogeneity of the socially responsible investment (SRI) movement. However, few have actually tried to understand and explain it, and even fewer have discussed whether the opposite – standardisation – is possible and desirable. In this article, we take a broader perspective on the issue of the heterogeneity of SRI. We distinguish between four levels on which heterogeneity can be found: the terminological, definitional, strategic and practical. Whilst there is much talk about the definitional ambiguities (...) of SRI, we suggest that there is actually some agreement on the definitional level. There are at least three explanations which we suggest can account for the heterogeneity on the other levels: cultural and ideological differences between different regions, differences in values, norms and ideology between various SRI stakeholders, and the market setting of SRI. Discussing the implications of the three explanations for the SRI market, we suggest that there is reason to be sceptical about the possibilities of standardisation if not standardisation is imposed top-down. Whether this kind of standardisation is desirable or not, we argue, depends on what the motives for it would be. To the extent that standardisation may facilitate the mainstreaming of SRI, it could be a good thing – but we entertain doubts about whether mainstreaming really requires standardisation. (shrink)

This article contributes to the literature on national varieties of socially responsible investment (SRI) by demonstrating how Scandinavian SRI developed from the 60s and onwards. Combining findings on Scandinavian SRI with insights from previous research and institutional theory, the article accounts for the role of changes in societal values and norms, the mechanisms by which SRI practices spread, and how investors adopt and transform practices to suit their surrounding institutional contexts. Especially, the article draws attention to how different categories of (...) investors act as institutional entrepreneurs during specific historical periods, and how these roles come to shift as institutional rule systems of varying societal levels change. Thus, the insights gained are useful in the future research agenda concerned with advancing knowledge on idiosyncrasies and commonalities of national SRI manifestations, and to understand the reasons underlying such characteristics. (shrink)

We analyze ethical policies of firms in industrialized countries and try to find out whether culture is a factor that plays a significant role in explaining country differences. We look into the firm’s human rights policy, its governance of bribery and corruption, and the comprehensiveness, implementation and communication of its codes of ethics. We use a dataset on ethical policies of almost 2,700 firms in 24 countries. We find that there are significant differences among ethical policies of firms headquartered in (...) different countries. When we associate these ethical policies with Hofstede’s cultural indicators, we find that individualism and uncertainty avoidance are positively associated with a firm’s ethical policies, whereas masculinity and power distance are negatively related to these policies. (shrink)

Finance is grease to the economy. Therefore, we assume that it may affect corporate social responsibility (CSR) and the sustainability of economic development too. This paper discusses the transmission mechanisms between finance and sustainability. We find that there is no simple one-to-one relationship between financial development and sustainable development but there are various – often indirect – linkages. It appears that most of the literature concentrates on the role of public shareholders when it comes to changing corporate policy and performance (...) in a more sustainable direction. However, this focus neglects the potential impact of the credit channel and private equity on a firm’s non-financial policies and performance. These very powerful mechanisms can govern business policies and practices. Therefore, there appears to be much more scope for finance to promote socially and environmentally desirable activities and to discourage detrimental activities than has been acknowledged in the academic literature so far. (shrink)

In this paper, we use online search engines and archive collections to examine the popularity of socially responsible investing (SRI) in newspapers and academic journals. A simple content analysis suggests that most of the papers on SRI focus on financial performance. This profusion of research is somewhat puzzling as most of the studies used roughly the same methodology and obtained very similar results. So, why are there so many studies on SRI financial performance? We argue that the academic literature on (...) SRI is mostly data driven: the famous ‘looking for the keys under the lamppost’ syndrome. The question of the financial performance of the SRI funds is certainly relevant but maybe too much attention has been paid to this issue, whereas more research is needed on a conceptual and theoretical ground, in particular the aspirations of SRI investors, the relationship between regulation and SRI as well as the assessment of extra‐financial performances. (shrink)

This second edition of the ground-breaking Ethics in Finance is an up-to-date, valuable addition to the emerging field of finance ethics. Citing examples of the scandals that have shaken public confidence in Wall Street, John R. Boatright explains the importance of ethics in the operation of financial markets and institutions and in the conduct of finance professionals." "Focusing on standards of fairness in market transactions and the duties of fiduciaries and agents in financial relationships, the author introduces a broad range (...) of practical issues related to financial markets, the financial services industry, investment decision making, and corporate financial management. In addition to the topics considered in the first edition, including unethical sales practices, insider trading, the abuse of bankruptcy, and hostile takeovers, the second edition of Ethics in Finance has a broadened scope, incorporating new discussions of issues in mutual funds, conflict of interest, and the financial theory of the firm." "This timely and comprehensive book provides an analysis of ethical issues in finance, suitable for students of finance and business ethics as well as anyone involved in financial activities."--Jacket. (shrink)

This article sets out to undertake a thorough, point-by-point examination of the theory postulated by Campbell (2007), in which an attempt is made to specify the conditions under which corporations may or may not act in socially responsible ways. In order to ensure the overall reliability of our study, and to attempt to provide a new understanding of, and greater insights into, whether corporate social responsibility (CSR) is affected by financial and institutional variables, we empirically investigate a total of 520 (...) financial firms in 34 countries, between the years 2003 and 2005. Our empirical findings are: (i) finns with larger size are more CSR minded, and the financial performance and CSR are not related; (ii) finns would actually act in more socially responsible ways to enhance their competitive advantages when the market competitiveness is more intense; (iii) financial firms in countries with stronger levels of legal enforcement tend to engage in more CSR activities; however, interestingly and rather strikingly, those finns in countries with stronger shareholder rights tend to engage in less CSR activities; and (iv) self-regulation within the financial industry has a significantly positive effect on CSR, with firms being found to act in more socially responsible ways in those countries which have more cooperative employer-employee relations, higher quality management schools, and a better macroeconomic environment. (shrink)

In this paper, we use online search engines and archive collections to examine the popularity of socially responsible investing (SRI) in newspapers and academic journals. A simple content analysis suggests that most of the papers on SRI focus on financial performance. This profusion of research is somewhat puzzling as most of the studies used roughly the same methodology and obtained very similar results. So, why are there so many studies on SRI financial performance? We argue that the academic literature on (...) SRI is mostly data driven: the famous ‘looking for the keys under the lamppost’ syndrome. The question of the financial performance of the SRI funds is certainly relevant but maybe too much attention has been paid to this issue, whereas more research is needed on a conceptual and theoretical ground, in particular the aspirations of SRI investors, the relationship between regulation and SRI as well as the assessment of extra-financial performances. (shrink)

Some argue that managers over-invest in corporate social responsibility (CSR) activities to build their personal reputations as good global citizens. Others claim that CEOs strategically choose CSR activities to reduce the probability of CEO turnover in a future period through indirect support from activists. Still others assert that firms use CSR activities to signal their product quality. We find that firms use governance mechanisms, along with CSR engagement, to reduce conflicts of interest between managers and non-investing stakeholders. Employing a large (...) and extensive sample of firms within Russell 2000, S& 500 and Domini 400 indices during the 1993-2004 period, we find that consistent with the conflict-resolution hypothesis, the CSR choice is positively associated with governance characteristics, including board independence, institutional ownership, and analyst following. In addition, after correcting for endogeneity of CSR engagement, our results show that CSR engagement positively influences operating performance and firm value, supporting the conflict-resolution hypothesis as opposed to the over-investment and strategic-choice arguments. We find only a weak support of the product-signaling hypothesis as a major motive of CSR engagement. (shrink)

Based on an inductive study we analyse the role of the investor relations (IR) function in the light of rising investor concern about corporate social responsibility (CSR). The study draws on interviews with IR professionals in twenty firms. It highlights their awareness of CSR issues as well as their assessment of concern among mainstream investors and socially responsible investors (SRIs). From these findings we develop suggestions on how the IR function is moving from a mere “broadcasting” mode regarding CSR issues (...) into a much more interactive mode of relationship management. (shrink)

This chapter contains sections titled: Financial markets Financial services Financial management.

In this article I will describe the main elements of the Norwegian press’s moral confrontation with the Government Pension Fund’s ethical investment management when it was in an introductory phase in early 2005, with special emphasis on one newspaper, Stavanger Aftenblad. The press criticized the fund’s fresh investment profile and intended exclusionary practice before it had really started in earnest. Then I will focus on how the press’s unilateral criticism of the fund’s investment practice at the time overshadowed a discussion (...) of any defects in the ethical principles for investment. And I will focus on the press’s lack of distinguishing between information and sensation. In conclusion I point out that in 2006 the press has abandoned its critical stance from 2005 and has now a tendency to idealize the fund’s exclusionary practice and the underlying principles. (shrink)

Corruption Perceptions Index (CPI) scores for 47 countries reported by Transparency International were used to ascertain determinants of bribe taking in international business. Two sets of independent variables – economic and cultural – were used in a multiple regression analysis. Results indicate that bribe taking was more likely to be prevalent in countries with low per capita income and lower disparities in income distribution. Cultural factors such as high power distance and high masculinity in a country were also likely to (...) be associated with high level of bribe taking. Both economic and cultural factors were important explanatory factors of bribery. Implications of the findings for combating bribery are discussed. (shrink)