A central and contentious debate in many literatures concerns the relationship between financial and social performance. We advance this debate by measuring the financial-social performance link within mutual funds that practice socially responsible investing (SRI). SRI fund managers have an array of social screening strategies from which to choose. Prior studies have not addressed this heterogeneity within SRI funds. Combining modern portfolio and stakeholder theories, we hypothesize that the financial loss borne by an SRI fund due to poor diversification is offset as social screening intensifies because better managed and more stable firms are selected into its portfolio. We find support for this hypothesis through an empirical test on a panel of 61 SRI funds from 1972-2000. The results show that as the number of social screens used by an SRI fund increases, financial returns decline at first, but then rebound as the number of screens reaches a maximum. That is, we find a curvilinear relationship, suggesting that two long-competing viewpoints may be complementary. Furthermore, we find that financial performance varies with the types of social screens used. Community relations screening increased financial performance, but environmental and labor relations screening decreased financial performance. Based on our results, we suggest that literatures addressing the link between financial and social performance move toward in-depth examination of the merits of different social screening strategies, and away from the continuing debate on the financial merits of either being socially responsible or not.

Beyond dichotomy: the curvilinear relationship between social responsibility and financial performance

Coronavirus (COVID-19) - An epidemic or pandemic for financial markets.

How does green finance affect green total factor productivity? Evidence from China

COVID-19 and the United States financial markets' volatility.

Demand for green finance: Resolving financing constraints on green innovation in China

Loaning scale and government subsidy for promoting green innovation

This paper aims to construct a comprehensive corporate environmental responsibility (CER) engagement measurement to examine the relationship between CER engagement and firm value as well as explore the mediating effect of corporate innovation on this relationship based on a sample of 496 China's A‐share listed companies from 2008 to 2016. The results show that when firms start to adopt environmental regulations, CER would have a negative effect on firm value; however, at a specific level, CER would start to enhance firm value positively. In addition to this, corporate innovation plays a mediating role in the relationship between CER and firm value. Corporate innovation promotes firm value of firms with CER more than firms without CER. Overall, the findings of this paper are extremely relevant for the government, investors, and firm's managers and can be utilized for policy and investment decision making. Also, the findings encourage firms to enhance their sense of environmental responsibility in order to enhance their competitive advantages, enhance corporate innovation capabilities, and thus enhance firm value.

Does corporate environmental responsibility engagement affect firm value? The mediating role of corporate innovation

Green loan and subsidy for promoting clean production innovation

Green insurance subsidy for promoting clean production innovation

Impact of economic policy uncertainty shocks on China's financial conditions

Zhenghui Li

Papers

Loaning scale and government subsidy for promoting green innovation

Does corporate environmental responsibility engagement affect firm value? The mediating role of corporate innovation

Green loan and subsidy for promoting clean production innovation

Green insurance subsidy for promoting clean production innovation

Impact of economic policy uncertainty shocks on China's financial conditions