Are sustainability-oriented investors different? Evidence from equity crowdfunding

AbstractIn this article, we examine how investor motives affect investment behavior in equity crowdfunding. In particular, we compare the investment behavior of sustainability-oriented with ordinary crowd investors on six leading equity crowdfunding platforms in Austria and Germany and investigate whether they suffer from a default shock that was recently identified by Dorfleitner et al. (2019). In general, we find evidence of a default shock in equity crowdfunding that occurs immediately after the event or if investors experience more than two insolvencies. Moreover, we find that sustainability-oriented investors pledge larger amounts of money and invest in more campaigns than ordinary crowd investors. The results also suggest that sustainability-oriented crowd investors care about non-financial returns, as they react more sensitively after experiencing a default in their equity crowdfunding portfolios, which indicates that they suffer beyond the pure financial loss. These findings contribute to recent literature on equity crowdfunding, socially responsible investing, and how individual investment motives and personal experiences affect investment decisions.

Download Full-text

Divest, Disregard, or Double Down? Philanthropic Endowment Investments in Objectionable Firms

American Economic Review: Insights ◽

10.1257/aeri.20180347 ◽

2019 ◽

Vol 1 (2) ◽

pp. 241-256 ◽

Cited By ~ 1

Author(s):

Brigitte Roth Tran

Keyword(s):

Investment Decision ◽

Investment Decisions ◽

Socially Responsible Investing ◽

Firm Risk ◽

Socially Responsible ◽

Responsible Investing ◽

Trade Offs ◽

Profit Maximizing

How much, if at all, should an endowment invest in a firm whose activities run counter to the charitable missions the endowment funds? I offer the first model characterizing this type of investment decision. I introduce a strategy called “mission hedging,” where—in contrast to traditional socially responsible investing—foundations may benefit from skewing investment toward the objectionable firm in order to align funding availability with need. I characterize the trade-offs driving foundation investment decisions. By leveraging the idiosyncratic firm risk typically diversified away in profit-maximizing portfolios, foundations may find that bad actors provide good opportunities to hedge mission-specific risks. (JEL G11, G14, L31, M14)

Download Full-text

Wealthy Private Investors and Socially Responsible Investing: The Influence of Reference Groups

Sustainability ◽

10.3390/su132212931 ◽

2021 ◽

Vol 13 (22) ◽

pp. 12931

Author(s):

David Risi ◽

Falko Paetzold ◽

Anne Kellers

Keyword(s):

Group Theory ◽

Social Welfare ◽

Reference Group ◽

Socially Responsible Investing ◽

Theory And Practice ◽

Investment Behavior ◽

Reference Groups ◽

Socially Responsible ◽

Responsible Investing ◽

Reference Group Theory

Sustainable development requires a shift from traditionally invested assets to socially responsible investing (SRI), bringing together financial profits and social welfare. Private high-net-worth individuals (HNWIs) are critical for this shift as they control nearly half of global wealth. While we know little about HNWIs’ investment behavior, reference group theory suggests that their SRI engagement is influenced by their identification with and comparison to reference groups. We thus ask: how do reference groups influence the investment behavior of SRI-oriented HNWIs? To answer this question, we analyzed a unique qualitative data set of 55 semi-structured interviews with SRI-oriented HNWIs and industry experts. Our qualitative research found that, on the one hand, the family serves as a normative reference group that upholds the economic profit motive and directly shapes HNWIs to make financial gains from their investments at the expense of social welfare. On the other hand, fellow SRI-oriented HNWIs serve as a comparative reference group that does not impose any concrete requirements on social welfare performance, indirectly influencing SRI-oriented HNWIs to subordinate social concerns to financial profits. Our scholarly insights contribute to the SRI literature, reference group theory, and practice.

Download Full-text

Understanding Socially Responsible Investing and Its Implications for Islamic Investment Industry

Journal of Emerging Economies and Islamic Research ◽

10.24191/jeeir.v7i1.6015 ◽

2019 ◽

Vol 7 (1) ◽

pp. 1

Author(s):

Mohd Nizam Barom

Keyword(s):

Investment Decision ◽

Socially Responsible Investing ◽

Clear Understanding ◽

Socially Responsible ◽

Responsible Investment ◽

Developed Economies ◽

Responsible Investing ◽

Screening Strategies ◽

Investment Process ◽

Islamic Investment

Understanding Socially Responsible Investing and Its Implications for Islamic Investment Industry // // // // // Social, ethical and environmental concerns have been used as important consideration for investment decision by an increasing number of investors. This can be seen by the size and growth of the socially responsible investment (SRI) industry in the developed economies. At the same time, scholars and commentators of Islamic finance have also called for Islamic investment industry to learn from the experience of SRI in incorporating social responsibility issues in the investment process, in line with the ethical principles of Islam and the overall objective of the Shari’ah (Maqasid al-Shari’ah). This would require Islamic investment sector to have a clear understanding of the SRI industry in order to effectively benefit from its experience. This is particularly critical due to the significant diversity of investors and complexity in the issues and strategies adopted in the SRI industry. Hence, this paper adds to the Islamic investment literature by providing an extensive and systematic survey of SRI industry in terms of its (i) underlying motivations and values; (ii) issues of concerns; (iii) types of investors; and (iv) screening strategies. It then synthesizes these components within the context of the ‘value-based’ investors. This synthesized framework offers a useful tool for Islamic investment practitioners to understand the theoretical and practical aspects of SRI. Subsequently, the paper highlights important implications of the findings for Islamic investment industry in terms of the issues that it needs to consider in emulating SRI practices and a number of lessons that it can learn from the SRI experience.

Download Full-text