Social Responsibility and Asset Prices: Is there a Relation?

Marianne Andries


Socially responsible investors take into consideration other criteria than risk and returns upon deciding which firms to invest in. If these investors are sufficiently numerous, they can impact the representative utility function and thus affect firms' stock returns. My aim is to test this hypothesis and analyze if there is a relation between the corporate social responsibility of firms and their stock returns. Using the ratings attributed to firms in the S&P 500 index by KLD, a rating agency specialized in social responsibility, I observe that preferences for social responsibility were not reflected in returns prior to year 2000. However, in the more recent 2000-2006 period, I do observe lower returns for the more socially responsible firms in specific criteria of social responsibility.


Marianne Andries, Social Responsibility and Asset Prices: Is there a Relation?, 2008.

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