Author
Chendi Zhang
Other affiliations: University of Sheffield, Tilburg University, University of Warwick
Bio: Chendi Zhang is an academic researcher from University of Exeter. The author has contributed to research in topics: Institutional investor & Socially responsible investing. The author has an hindex of 18, co-authored 51 publications receiving 3460 citations. Previous affiliations of Chendi Zhang include University of Sheffield & Tilburg University.
Papers published on a yearly basis
Papers
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TL;DR: In this paper, the authors provide a critical review of the literature on socially responsible investments (SRI) and conclude that existing studies hint but do not unequivocally demonstrate that SRI investors are willing to accept suboptimal financial performance to pursue social or ethical objectives.
Abstract: This paper provides a critical review of the literature on socially responsible investments (SRI). Particular to SRI is that both financial goals and social objectives are pursued. Over the past decade, SRI has experienced an explosive growth around the world reflecting the increasing awareness of investors to social, environmental, ethical and corporate governance issues. We argue that there are significant opportunities for future research on the increasingly important area of SRI. A number of questions are reviewed in this paper on the causes and the shareholder-value impact of corporate social responsibility (CSR), the risk exposure and performance of SRI funds and firms, as well as fund subscription and redemption behavior of SRI investors. We conclude that the existing studies hint but do not unequivocally demonstrate that SRI investors are willing to accept suboptimal financial performance to pursue social or ethical objectives. Furthermore, the emergence of SRI raises interesting questions for research on corporate finance, asset pricing, and financial intermediation.
1,254 citations
TL;DR: In this paper, the authors investigated the under-and overperformance hypotheses for all SRI funds across the world and found that the underperformance of SRI fund is not driven by loadings on an ethics style factor.
675 citations
TL;DR: In this article, an industry equilibrium model where firms have a choice to engage in corporate social responsibility (CSR) activities is presented, where CSR as an investment to increase product differen...
Abstract: This paper presents an industry equilibrium model where firms have a choice to engage in corporate social responsibility (CSR) activities. We model CSR as an investment to increase product differen...
564 citations
TL;DR: It is shown that CSR decreases systematic risk and increases firm value and these effects are stronger for firms producing differentiated goods and when consumers' expenditure share on CSR goods is small.
Abstract: This paper presents an industry equilibrium model where firms have a choice to engage in corporate social responsibility (CSR) activities. We model CSR activities as a product differentiation strategy allowing firms to benefit from higher profit margins. The model predicts that CSR decreases systematic risk and increases firm value and that these effects are stronger for firms operating in differentiated goods industries and when consumers' expenditure share on CSR goods is small. We find supporting evidence for our predictions. We address a potential endogeneity problem by instrumenting CSR using data on the political affiliation of the firm's home state.
553 citations
TL;DR: This paper showed that stocks with higher ES ratings have significantly higher returns, lower return volatility, and higher operating profit margins during the COVID-19 pandemic and the subsequent lockdown brought about an exogenous and unparalleled stock market crash The crisis thus provides a unique opportunity to test theories of environmental and social policies.
Abstract: The COVID-19 pandemic and the subsequent lockdown brought about an exogenous and unparalleled stock market crash The crisis thus provides a unique opportunity to test theories of environmental and social (ES) policies This paper shows that stocks with higher ES ratings have significantly higher returns, lower return volatility, and higher operating profit margins during the first quarter of 2020 ES firms with higher advertising expenditures experience higher stock returns, and stocks held by more ES-oriented investors experience less return volatility during the crash This paper highlights the importance of customer and investor loyalty to the resiliency of ES stocks
385 citations
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TL;DR: This paper examined the effect of corporate social responsibility (CSR) on the cost of equity capital for a large sample of US firms and found that firms with better CSR scores exhibit cheaper equity financing.
Abstract: We examine the effect of corporate social responsibility (CSR) on the cost of equity capital for a large sample of US firms. Using several approaches to estimate firms’ ex ante cost of equity, we find that firms with better CSR scores exhibit cheaper equity financing. In particular, our findings suggest that investment in improving responsible employee relations, environmental policies, and product strategies contributes substantially to reducing firms’ cost of equity. Our results also show that participation in two “sin” industries, namely, tobacco and nuclear power, increases firms’ cost of equity. These findings support arguments in the literature that firms with socially responsible practices have higher valuation and lower risk.
1,660 citations
Posted Content•
TL;DR: This paper analyzed the relationship between employee satisfaction and long-run stock returns and found that employee satisfaction is positively correlated with shareholders' returns and need not represent managerial slack, even when independently verified by a highly public survey on large firms.
Abstract: This paper analyzes the relationship between employee satisfaction and long-run stock returns. A value-weighted portfolio of the "100 Best Companies to Work For in America" earned an annual four-factor alpha of 3.5% from 1984-2009, and 2.1% above industry benchmarks. The results are robust to controls for firm characteristics, different weighting methodologies and the removal of outliers. The Best Companies also exhibited significantly more positive earnings surprises and announcement returns. These findings have three main implications. First, consistent with human capital-centered theories of the firm, employee satisfaction is positively correlated with shareholder returns and need not represent managerial slack. Second, the stock market does not fully value intangibles, even when independently verified by a highly public survey on large firms. Third, certain socially responsible investing ("SRI") screens may improve investment returns.
1,256 citations
TL;DR: In this paper, the authors provide a critical review of the literature on socially responsible investments (SRI) and conclude that existing studies hint but do not unequivocally demonstrate that SRI investors are willing to accept suboptimal financial performance to pursue social or ethical objectives.
Abstract: This paper provides a critical review of the literature on socially responsible investments (SRI). Particular to SRI is that both financial goals and social objectives are pursued. Over the past decade, SRI has experienced an explosive growth around the world reflecting the increasing awareness of investors to social, environmental, ethical and corporate governance issues. We argue that there are significant opportunities for future research on the increasingly important area of SRI. A number of questions are reviewed in this paper on the causes and the shareholder-value impact of corporate social responsibility (CSR), the risk exposure and performance of SRI funds and firms, as well as fund subscription and redemption behavior of SRI investors. We conclude that the existing studies hint but do not unequivocally demonstrate that SRI investors are willing to accept suboptimal financial performance to pursue social or ethical objectives. Furthermore, the emergence of SRI raises interesting questions for research on corporate finance, asset pricing, and financial intermediation.
1,254 citations
01 Jan 2012
TL;DR: The influence of institutional investors on myopic R＆D investment behavior was discussed by Bushee as discussed by the authors, who claimed that institutional investors had a profound influence on investment behavior.
Abstract: 机构投资者作为证券市场中的重要力量,越来越受到理论界和实务界的关注。论文对宾夕法尼亚大学沃顿商学院会计学教授布赖恩-布希（Brian Bushee）的论文＂The influence of institutional investors on myopic R＆D investment behavior＂（机构投资者对企业短视研发投资行为的影响,以下简称Bushee（1998））进行评价并提出相关的建议和研究方向。
1,246 citations
TL;DR: This paper found that women invest less and appear to be more financially risk averse than men, while men are more willing to take financial risks than women, and that women are more likely to buy stocks than men.
Abstract: Are men more willing to take financial risks than women? The answer to this question has immediate relevance for many economic issues. We assemble the data from 15 sets of experiments with one simple underlying investment game. Most of these experiments were not designed to investigate gender differences and were conducted by different researchers in different countries, with different instructions, durations, payments, subject pools, etc. The fact that all data come from the same basic investment game allows us to test the robustness of the findings. We find a very consistent result that women invest less, and thus appear to be more financially risk averse than men.
1,180 citations