A tale of values-driven and profit-seeking social investors

J.M.M. Derwall, C.G. Koedijk, J.R. Ter Horst

Research output: Contribution to journalArticleScientificpeer-review

235 Citations (Scopus)


The segmentation of the socially responsible investing (SRI) movement with a values-versus-profit orientation solves the puzzling evidence that both socially responsible and controversial stocks produce superior returns. We derive that the segment of values-driven investors primarily uses “negative” screens to avoid controversial stocks, while the profit-driven segment uses “positive” screens. As the result of an empirical analysis over the period 1992–2008, we base our segmentation on investment screens that help us to examine whether values affect prices. We find that, although the profit-driven segment earns abnormal returns in the short run, these profit-generating opportunities do not persist in the long run for SRI stocks. However, our conclusions highlight the observation that different views on SRI can be complementary in the short run.
Original languageEnglish
Pages (from-to)2137-2147
JournalJournal of Banking & Finance
Issue number8
Publication statusPublished - 2011


  • investor behavior
  • values
  • socially responsible investing
  • risk
  • return


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