Conservation, Discrimination, and Salvation: Investors' Social Concerns in the Stock Market
John R. Nofsinger
University of Alaska Anchorage
Illinois State University
January 28, 2013
Journal of Financial Services Research, Vol. 45, No. 1, 2014
Stocks appear to have investor clienteles based on their business practices and products. The variety in expressive benefits each individual receives from owning controversial stocks causes them to modify their portfolio to accommodate their beliefs. We examine the ownership of firms with social concerns and sin stocks (tobacco, alcohol and gambling). Women tilt their portfolios towards stocks with progressive labor policies for women and minorities. Younger investors avoid companies with poor environmental records but seek companies with progressive labor policies. Democratic voters favor stocks with progressive policies regarding women/minorities and gays/lesbians and are less likely to own sin stocks. Christian objections to homosexuality lead their members to invest less in stocks with progressive labor policies for gays and lesbians. The Christian denominations vary, though, in regard to sin stocks. Catholics are more likely while Mormons are less likely to own a sin stock relative to other investors. Socially responsible investors are clearly not all alike. Social characteristics that are important to one investor may not be important to another socially conscious investor.
Keywords: Socially responsible investing, behavioral finance, religion
JEL Classification: G02, G11, Z12
Date posted: November 6, 2011 ; Last revised: March 1, 2015
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