Publication type: Working paper – expertise – study
Title: Social responsibility in the time of uncertainty : a natural experiment
Authors: Mahmoud, Ola
Meyer, Julia
et. al: No
DOI: 10.2139/ssrn.3774995
Extent: 50
Issue Date: 1-Feb-2021
Publisher / Ed. Institution: SSRN
ISSN: 1556-5068
Language: English
Subjects: Social responsibility; Social preference; Uncertainty; Affect heuristic
Subject (DDC): 332.6: Investment
Abstract: This paper studies social responsibility in the financial market under uncertainty. Using the COVID-19 induced stock market crash as a natural experiment, we present causal evidence for a significant market-wide increase in sentiment for and attention to socially responsible investments. An artefactual field experiment suggests three behavioral channels for this shift in preferences. First, investors view socially responsible assets as less risky and uncertain. Second, the crisis triggered an increase in prosocial preferences in general. Third, the affect heuristic, in which the emotional response acts as a mental shortcut in relation to a stimulus, triggers favorable expectations of socially responsible investment performance. Our insights provide evidence for the time varying nature of morality in the market, and may explain the recently documented resilience of socially responsible stocks in times of market turmoil.
License (according to publishing contract): Licence according to publishing contract
Departement: School of Management and Law
Organisational Unit: Institute for Financial Management (IFI)
Appears in collections:Publikationen School of Management and Law

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