The performance of morally questionable shares in South Africa (2004–2019)
Journal of Economic and Financial Sciences
| Field | Value | |
| Title | The performance of morally questionable shares in South Africa (2004–2019) | |
| Creator | Steyn, Johannes P. Viviers, Suzette | |
| Description | Orientation: Investors are increasingly weighing up the cost of investing in companies with adverse impacts on society and the natural environment.Research purpose: In light of the shift to responsible investing, this study compared the risk-adjusted performance of a portfolio of morally questionable shares listed on the Johannesburg Stock Exchange (JSE) to a portfolio consisting of morally acceptable (responsible) ones.Motivation for the study: Although previous research suggests that investors can perform well by investing in morally questionable shares (such as alcohol and tobacco), sentiment is rapidly moving towards a more responsible approach to selecting shares.Research approach/design and method: The historic returns of equity portfolios were evaluated over the period July 2004 to April 2019. Two equally weighted portfolios were constructed: one for morally questionable shares and the other for morally acceptable shares. These portfolios’ risk-adjusted returns were compared to the JSE Responsible Investment Composite Index, the Financial Times Stock Exchange/JSE Shareholder Weighted Index and an equally weighted benchmark. In addition, the analysis was divided into two distinct sub-periods, covering the financial crisis and the subsequent recovery period. Morally questionable companies included those with exposure to alcohol, tobacco, gambling, oil, gas and coal.Main findings: Morally questionable investing in South Africa does not produce risk-adjusted outperformance. No evidence was found to support the theories predicting the outperformance of morally questionable shares on the JSE.Practical/managerial implications: Socially and environmentally conscious investors can achieve risk-adjusted returns comparable to those of investors who opt to invest in morally questionable shares and conventional benchmarks.Contribution/value-add: The study provides insights for investors who are concerned about the opportunity costs of adopting a responsible investment approach. | |
| Publisher | AOSIS | |
| Date | 2020-10-22 | |
| Identifier | 10.4102/jef.v13i1.549 | |
| Source | Journal of Economic and Financial Sciences; Vol 13, No 1 (2020); 12 pages 2312-2803 1995-7076 | |
| Language | eng | |
| Relation |
The following web links (URLs) may trigger a file download or direct you to an alternative webpage to gain access to a publication file format of the published article:
https://jefjournal.org.za/index.php/jef/article/view/549/1073
https://jefjournal.org.za/index.php/jef/article/view/549/1072
https://jefjournal.org.za/index.php/jef/article/view/549/1074
https://jefjournal.org.za/index.php/jef/article/view/549/1071
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