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Socially Conscious Investors Mitigating Stock Market Losses in A Time of Crisis: Evidence from the COVID-19 Crash

Year: 2025

Type: article

Abstract: Recent years have witnessed a surge in investors with a socially responsible investment mandate. We study stock returns associated with this practice in the COVID-19 crash and surrounding months. Stocks with greater socially responsible investor demand experience superior returns, lower volatility, and weaker market valuation decline during the crash. These effects disappear post-crash. No differences are found with respect to sales, gross profitability, and operating income as well as expectations about the long-term growth rate of earnings per share. These results suggest that socially responsible investors can act as a moderating force by mitigating losses in a time of crisis.

Source: Quarterly Journal of Finance

DOI: 10.1142/s2010139225500016

Authors: Ruoke Yang, Iva Koci

Institutions: United States Securities and Exchange Commission, Imperial College London, King's College London

Language: English

Topic: Financial Markets and Investment Strategies

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: green

OpenAlex ID: W4408470811

FWCI:

Cites: 21

Cited by:

Related to: 10