Homayoon Shalchian1, Bouchra M’Zali2, Alain Paquet2

(1. Laurentian University, ON, Canada; 2. University of Quebec at Montreal, QC, Canada)

 

 

Abstract: We present a model of an asset market in which socially responsible investors with their perception of corporate social responsibility (CSR) affect the price of individual assets and, consequently, the expected returns. The simultaneous reactions of socially responsible and conventional investors would result in a higher expected return for the socially responsible assets and a higher expected utility for socially responsible investors. Our results show that through the process of learning and “imitation”, the impact of CSR on the financial performance of socially responsible investors can be reduced to a relatively lower level compared to the situation of absence of imitation.

 

 

Keywords: corporate social performance; socially responsible investments; socially responsible stocks; asset

pricing

 

JEL codes: G11, G19, M14