Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/297662 
Authors: 
Year of Publication: 
2020
Citation: 
[Journal:] International Journal of Corporate Social Responsibility (JCSR) [ISSN:] 2366-0074 [Volume:] 5 [Issue:] 1 [Article No.:] 5 [Year:] 2020 [Pages:] 1-17
Publisher: 
Springer, Heidelberg
Abstract: 
Socially responsible investment (SRI) evolved, along the last two decades, from an almost unexplored topic inscience to a recurrent theme of research and debate in Economics and Finance. The growing interest on the theme has two fundamental causes. On one hand, empirical evidence unveils a change of behavior of investors, who typically no longer restrict their decision-making to a strict financial analysis; ethical, social, environmental, and political concerns are also on the forefront of investors' assessments. On the other hand, the economic science is witnessing a paradigm shift characterized by a progressive departure from the orthodox rational deliberation framework and in the direction of the introduction of behavioral elements. In this study, an intertemporal model is proposed to serve as a benchmark for the evaluation of the implications of social and environmental awareness upon investors' decisions and investment performance. The model is a simple optimal control framework that highlights the trade-off between financial returns and the satisfaction emanating from investing in firms or projects guided by ethical values and by good governance principles. Better financial outcomes may come with a social damage that the representative agent in the model will include, with a negative sign, in her utility function. Long-term steady-state results and transitional dynamics are duly evaluated for neoclassical and endogenous growth versions of the model.
Subjects: 
Socially responsible investment
Ethical investment
Warm-glow effect
Intertemporal optimization
Endogenous growth
Transitional dynamics
JEL: 
G41
O41
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

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