Are Ethical Investments Good?
Posted: 15 Aug 2009 Last revised: 16 Dec 2013
Date Written: December 16, 2013
Abstract
Our study considers whether ethical investments are also good investments. In contrast with previous studies, we utilise long-run event study methodology to examine abnormal returns associated with firms being included in, and dropped from, the MSCI KLD400 Social Index (MSCI KLD400). We find that there are positive and statistically significant long-run abnormal returns for firms being included in the MSCI KLD400. These abnormal returns are associated with higher shareholdings by institutional investors (who are subject to higher public scrutiny), higher analyst coverage and higher growth opportunities.
Keywords: MSCI KLD400 Social Index, Portfolio Choice, Socially Responsible Investing,
JEL Classification: G12, G14, M14
Suggested Citation: Suggested Citation