Responsible investing: New insights into performance and tastes

In this dissertation I study several financial aspects of socially responsible investing (SRI). It has become relevant due to the rise in assets under management with some form of social responsibility mandate over the past decades. SRI knows different dimensions; investors can (under-) overweight investments in firms with (un-) desirable business practices (e.g. excluding weapons manufacturers). On the other hand investors can engage with companies.

In Chapter 2, I show that it is possible to get abnormally large returns when overweighting firms with high CSR ratings. Trading on mispriced CSR information can be profitable when the market learns to correctly price this information. In Chapter 3, I show that norms and values have the potential to affect asset prices and that this form of tastes can affect mutual fund performance. Chapter 4 directly investigates tastes for socially responsible pension investments by investigating Dutch beneficiaries. Chapter 5 studies if institutional investors classified along SRI dimensions, respond differently to stock price news.