social norms and csr performance some institutional investors e g pensions universities and religious charitable and not for profit institutions are exposed to social norms and public scrutiny prior research indicates that these norm constrained institutions engage in negative screening and invest less in firms operating in sin industries we examine whether social norms also motivate these institutions to engage in positive screening where they invest more in firms with better corporate social responsibility csr performance and csr related activism where they promote improvements in the csr of existing investees we find that firms with superior csr performance have greater ownership by norm constrained institutions consistent with positive screening and we use a natural experiment to establish causality we also find that increases in the shareholdings of norm constrained institutions are associated with subsequent improvements in csr consistent with activism further we rule out an alternative explanation for our results where the positive screening and activism are profit driven rather than driven by social pressure thus our results suggest that the influence of social norms on stock markets is more pervasive than documented in the prior literature

the causal effect of family income on child health in the uk recent studies examining the effect of family income on child health have been unable to account for the endogeneity of income using data from a british cohort study we address this gap by exploiting exogenous variation in local labour market characteristics to instrument for family income we estimate the causal effect of family income on different measures of child health and explore the role of potential transmission mechanisms we find that income has a very small but significant causal effect on subjective child health and no significant effect on chronic health conditions apart from respiratory illnesses using the panel structure we show that the timing of income does not matter for young children moreover our results provide further evidence that parental health does not drive a spurious relationship between family income and child health our study implies that financial transfers are unlikely to deliver substantial improvements in child health

inflation controlled by energy prices abstract the inflation experienced in the world economy over the last decade could have been considerably reduced if the world had been less dependent upon energy imports reduction of imports by an average of half reduces worldwide inflation by more than 30 countries supplying their own energy may benefit by having lower inflation than energy importing countries a low inflation rate is most easily achieved if the price of domestically produced energy follows the national price index in most countries some alternative energy sources may be competitive to imported energy when all the economic benefits of domestic energy production are taken into consideration

impact of energy price rises on costs a thermodynamic analysis abstract the standard of living in an industrialized country depends on the quantity of energy available and the efficiency with which it is utilized changes in the price of energy will for a time influence the choice of goods and services and so affect the world economy until the balance between prices for goods and energy is restored if we could control the economy during this time interval there is no reason why increases in energy prices should reduce our standard of living if renewable energy sources are to be more expensive than oil today by implication we need to invest much more capital to be able to utilize these sources we should therefore be willing to accept a smaller increase in standard of living and use the difference for investment in equipment to convert renewable energy sources to useful work only through new technology can the price of energy from such sources be reduced relative to the price of energy from oil increases in oil prices will not change the price ratio

urban poverty and juvenile crime evidence from a randomized housing mobility experiment this paper uses data from a randomized housing mobility experiment to study the effects of relocating families from high to low poverty neighborhoods on juvenile crime outcome measures come from juvenile arrest records taken from government administrative data our e ndings seem to suggest that providing families with the opportunity to move to lower poverty neighborhoods reduces violent criminal behavior by teens

two stage residual inclusion estimation addressing endogeneity in health econometric modeling the paper focuses on two estimation methods that have been widely used to address endogeneity in empirical research in health economics and health services research two stage predictor substitution 2sps and two stage residual inclusion 2sri 2sps is the rote extension to nonlinear models of the popular linear two stage least squares estimator the 2sri estimator is similar except that in the second stage regression the endogenous variables are not replaced by first stage predictors instead first stage residuals are included as additional regressors in a generic parametric framework we show that 2sri is consistent and 2sps is not results from a simulation study and an illustrative example also recommend against 2sps and favor 2sri our findings are important given that there are many prominent examples of the application of inconsistent 2sps in the recent literature this study can be used as a guide by future researchers in health economics who are confronted with endogeneity in their empirical work

estimating the effect of income on health and mortality using lottery prizes as an exogenous source of variation in income a vast literature has established a strong positive relation between income and health status and a negative relation with mortality this paper studies the effects of income on health and mortality using only the part of income variation due to a truly exogenous factor monetary lottery prizes of individuals the findings are that higher income causally generates good health and that this effect is of a similar magnitude as when traditional estimation techniques are used a 10 percent income increase improves health by about 4 5 percent of a standard deviation

institutional ownership of stock and dimensions of corporate social performance an empirical examination collectively institutions own an increasing proportion of outstanding corporate equities as an emergent force in shaping corporate america the linkages between institutional ownership and corporate social performance csp require empirical examination not only do corporate policy makers need to know those areas where social performance may lure or inhibit capital infusions lawmakers also need a better understanding of the social forces guiding corporate policy as anticipated this study found a positive relationship between the amount of institutional ownership of corporate stock and a company s social responsiveness as measured by the representation of women on its board of directors however no statistically significant relationship with social responsibility as measured by charitable giving was found the exemplar of social issues management compliance with the sullivan principles showed an unexpected negative relationship with the level of institutional ownership

moving to opportunity in boston early results of a randomized mobility experiment this paper examines the short run impacts of a change in residential neighborhood on the well being of low income families using evidence from a program in which eligibility for a housing voucher was determined by random lottery we examine the experiences of households at the boston site of moving to opportunity mto a demonstration program in five cities families in high poverty public housing projects applied to mto and were assigned by lottery to one of three groups experimental offered mobility counseling and a section 8 subsidy valid only in a census tract with a poverty rate of less than 10 percent section 8 comparison offered a geographically unrestricted section 8 subsidy or control offered no new assistance but continued to be eligible for public housing our quantitative analyses of program impacts uses data on 540 families from a baseline survey at program enrollment a follow up survey administered l to 3 5 years after random assignment and state administrative data on earnings and welfare receipt 48 percent of the experimental group and 62 percent of the section 8 comparison group moved through the mto program one to three years after program entry families in both treatment groups were more likely to be residing in neighborhoods with low poverty rates and high education levels than were families in the control group however while members of the experimental group were much more likely to be residing in suburban communities than were those in the section 8 group the lower program take up rate among the experimental group resulted in more families remaining in the most distressed communities households in both treatment groups experienced improvements in multiple measures of well being relative to the control group including increased safety improved health among household heads and fewer behavior problems among boys experimental group children were also less likely to be a victim of a personal crime to be injured or to experience an asthma attack there are no significant impacts of either mto treatment on the employment earnings or welfare receipt of household heads in the first three years after random assignment

ethical aspects of investor behavior the neoclassical paradigm assumes that shareholders utility is solely a function of their wealth and prescribes that management should act in a manner consistent with share price maximization the stakeholder view also assumes that shareholders utility derives from wealth but prescribes that managers must balance the shareholder wealth maximization objective against the rights of other constituencies thus while neoclassicists and stakeholder theorists have different prescriptives for management behavior their definitions of the shareholders interest are consistent shareholders are self interested economic agents whose utility is best served by share price maximization however if shareholders are other interested and attack importance to ethical and moral values then both the neoclassical and stakeholder view derive from invalid assumptions in this paper i present evidence that much shareholder behavior is ethically motivated as a result the basis for both the neoclassical and the stakeholder view are weakened

the determinants of mortality mortality rates have fallen dramatically over time starting in a few countries in the 18th century and continuing to fall today in just the past century life expectancy has increased by over 30 years at the same time mortality rates remain much higher in poor countries with a difference in life expectancy between rich and poor countries of also about 30 years this difference persists despite the remarkable progress in health improvement in the last half century at least until the hiv aids pandemic in both the time series and the cross section data there is a strong correlation between income per capita and mortality rates a correlation that also exists within countries where richer better educated people live longer we review the determinants of these patterns over history over countries and across groups within countries while there is no consensus about the causal mechanisms we tentatively identify the application of scientific advance and technical progress some of which is induced by income and facilitated by education as the ultimate determinant of health such an explanation allows a consistent interpretation of the historical cross country and within country evidence we downplay direct causal mechanisms running from income to health

oil price and inflation abstract an oil price rise would be expected to result in an immediate reduction by about 20 in the standard of living of the oil importing countries and a corresponding increase in that of the oil exporters since the price rises experienced during recent years have not been reflected in wage reductions the result has been high long lasting inflation which this paper shows will increase in the coming years to more than 20 measures taken by the oil importers include energy saving which results in a still lower standard of living if instead the industrialized countries increase production by increasing energy consumption and improving production efficiency the effect of a rise in oil price will be compensated for in a few years

a resource based perspective on corporate environmental performance and profitability drawing on the resource based view of the firm we posited that environmental performance and economic performance are positively linked and that industry growth moderates the relationship with the returns to environmental performance higher in high growth industries we tested these hypotheses with an analysis of 243 finns over two years using independently developed environmental ratings results indicate that it pays to be green and that this relationship strengthens with industry growth we conclude by highlighting the study s academic and managerial implications making special reference to the social issues in management literature

does equity ownership matter for corporate social responsibility a literature review of theories and recent empirical findings based on the concept of shareholder primacy many scholars have argued that it is more important for businesses to earn profits for their shareholders than to provide benefits to society at large corporate social responsibility csr is often regarded as an investment that comes at the expense of shareholders in contrast research analyzing the connections between the equity ownership structure of a company and its level of csr engagement suggests that csr offers benefits to shareholders that go beyond direct financial returns from investments this study provides a comprehensive review and systematic assessment of theoretical considerations and approaches regarding different forms of equity ownership and their relationships to csr and it discusses the relevant benefits and motivations of shareholders the perceived value of these csr benefits varies among different types of shareholders as they assign unequal values to short term financial or to rather long term csr benefits based on a literature sample of 146 publications this review demonstrates central problems inherent in previous analyses given the ambiguous and partially contradictory findings of prior research this study identifies potential moderating influences that help clarify empirical evidence a contingency approach is suggested in future research as this can help resolve the problem of contradictory empirical findings and theoretical arguments

exploring the curvature of the relationship between hrm csr and corporate financial performance this article contributes to the general literature on the relationship between corporate social performance and corporate financial performance as well as to the emerging hrm csr literature by exploring the curvature of the relationship between hrm csp and cfp we advance conceptual arguments in favor of an inverted u shaped relationship our results demonstrate a significant quadratic relationship between hrm csp and cfp we provide evidence that this relationship is not linear or s shaped but rather inverted u shaped

a study of the link between a corporation s financial performance and its commitment to ethics a number of studies have tested the relationship between a corporation s social and ethical performance and its financial performance in contrast this is the first study to demonstrate a link between overall financial performance and an emphasis on ethics as an aspect of corporate governance it identifies the 26 8 percent of the 500 largest u s public corporations that in their annual report to shareholders commit to ethical behavior toward their stakeholders or emphasize compliance with their code of conduct the financial performance of these corporations ranks higher than that of those who do not at a significance level of p 0 005 using the 1997 business week ranking which averages eight publicly reported measures of historical financial performance these findings should motivate more corporations to utilize the principles of social and ethical accounting auditing and reporting seaar

does the influence of institutional investors depend on the institutional framework an international analysis this article analyses the effect of institutional ownership in alleviating or exacerbating the conflicts of interests among stakeholders in different legal and institutional frameworks this analysis is carried out based on two characteristics the concentration of power of institutional ownership and the identification of the main types of institutional investors in common law countries consistent with the convergence and entrenchment hypotheses we find a u shape relation between ownership structure and firm performance in civil law countries consistent with the collusion and contest theories we find an inverted u shape relation we also find that when institutional investors are classified as pressure resistant and pressure sensitive according to the strength of their ties with managers pressure resistant investors who operate more independently are the most capable of improving the value of the firm

corporate contributions altruistic or for profit existing literature has focused on three rationales for corporate philanthropy through the firm giving corporate statesmanship and profit motivated giving the profit motivation argument was exa

does social performance really lead to financial performance accounting for endogeneity the empirical relationship between a firm s social performance and its financial performance is still not well established in the literature despite more than 30 years of research and more than 100 empirical studies on the issue the results are still mixed we argue that the heterogeneous results found in previous studies are not due exclusively to problems related with the measurement instruments or the samples used instead we posit that a more fundamental problem related with the endogeneity of social strategic decisions could be driving most of the empirical findings we show that using a panel data of 658 firms from 1991 to 2005 how some of the results found in previous research change and some are even reversed when endogeneity is properly taken into account

a re examination of stationarity of energy consumption evidence from new unit root tests abstract in this paper we re examine the stochastic behaviour of per capita total primary energy consumption across 178 countries around the world for this purpose in addition to conventional unit root tests we apply newly developed tests that allow for nonlinear adjustments and structural breaks in the data generating process the results of the unit root tests show that allowing for structural breaks and nonlinearity result in more frequent rejection of the null hypothesis of unit root suggesting that most of the series under consideration follow a stationary process these findings imply that both energy economists and policy makers must be careful and take account of possible nonlinearities and structural breaks in their analyses of energy consumption in addition the results imply that government interventions into the energy markets in most countries have no effect in the long run although the short run effects of the interventions depend on the size and the direction of interventions

moral and conceptual issues in investment and finance an overview as director of the second east carolina university conference in applied philosophy it is my pleasure to introduce this fine collection of papers on moral and conceptual issues in investment and finance the essays address a wide range of topics south african disinvestment the professional responsibil ities of accountants decision theoretic problems for fiduciaries and the rights of employees in corporate takeovers to cite just a few examples consequently any attempt to somehow summarize or tie together all this material would be either extremely super ficial or far exceed the available space instead in what follows i try to supplement the papers first by offering some general observations about our con ference topic and secondly by identifying what seem to me to be some of the fertile areas for further research the title of our conference was meant to em phasize two points first although a number of philosophers and business scholars now study a field commonly called business ethics a more natural and general description of their interests might be philosophical issues in business the study of the particularly abstract foundational or normative aspects of business thus while topics such as the rights of employees or the social obligations of corporations are of course part of the philosophical study of business so are non normative or less explicitly normative questions such as whether and in what sense corporations are persons the extent to

healthy bodies and thick wallets the dual relation between health and economic status there is abundant evidence of a quantitatively large association between many measures of economic status including income and wealth and a variety of health outcomes such as mortality or morbidity however considerable and often heated debate remains especially across disciplines about the direction of causation and about why the association arises although medical scientists are often convinced that the dominant if not exclusive pathway is that variation in socioeconomic status produces health disparities they are increasingly debating among themselves about why low economic status might lead to poor health at least for modern industrial countries 1 the old standby arguments the less well to do have access to less or lower quality medical care or a stronger pattern of deleterious personal behaviors have been rejected as insufficient instead a series of intriguing competing theories have arisen that emphasize long term impacts of early childhood or even inter uterine environmental factors the cumulative effects of prolonged exposures to individual stressful events or reactions to macro societal factors such as rising levels of income inequality a common link is that each theory attempts to document the physiological processes through which low economic status leads to poorer health while these scientific questions are extremely important this research has taken place with little input from economists economists are now making contributions about the alternative pathway the impact poor health may have on economic resources poor health may restrict a family s capacity to earn income or to accumulate assets by limiting work or by raising medical expenses at a minimum this work should provide a caution against exaggerating the magnitude of causation from economic status to health outcomes but the potential contribution runs deeper as people age the evolving variation in individual health outcomes may offer additional statistical information to estimate parameters of household savings and consumption behavior that so far have proven to be somewhat elusive thus incorporating health uncertainty and risk into economic models should eventually enrich our understanding of basic tenets of household behavior the first section of this paper documents the size of the association between health and one prominent economic status measure household wealth section two deals with how health influences economic status by sketching out reasons why health may alter household savings and eventually wealth and then providing estimates of the empirical magnitude of these effects section three shifts attention to the alternative pathway the links between economic status and health and summarizes 2major controversies and evidence surrounding these issues

identification of endogenous social effects the reflection problem this paper examines the reflection problem that arises when a researcher observing the distribution of behaviour in a population tries to infer whether the average behaviour in some group influences the behaviour of the individuals that comprise the group it is found that inference is not possible unless the researcher has prior information specifying the compisition of reference groups if this information is available the prospects for inference depend critically on the population relationship between the variables defining reference groups and those directly affecting outcomes inference is difficult to implossible if these variables are functionally dependent or are statistically independent the prospects are better if the variables defining reference groups and those directly affecting outcomes are moderately related in the population

the corporation and profits in this paper i argue that a theory of the firm that takes profit maximizing to be the essential activity and purpose of the firm is seriously inadequate i argue that firms in the actual economy neither are nor should be maximizers of profit i argue instead that firms are and must be satisficers that they must make enough profit to satisfy the various demands which they encounter in their operation yet it should be clear that the notion of satisficing while it escapes the major problems encountered by maximization itself lacks much of any very clear content in the end i claim that the notion of satisficing can best be understood if we abandon the traditional characterization of profits and replace it with a notion of extended profits which i define as that part of corporate revenue which is available for distribution among stockholders management and labor and for reinvestment in the corporation s business operation

corporate social responsibility in the banking industry motives and financial performance abstract the current study investigates the association between corporate social responsibility csr and financial performance fp and discusses the driving motives of banks to engage in csr three motives namely strategic choices altruism and greenwashing suggest that the relationship between csr and fp is positive non negative and non existent respectively we obtained our sample which covered 2003 2009 from the ethical investment research service eiris databank and bankscope database the data consists of 162 banks in 22 countries we then classified the banks into four types based on their degree of engagement in csr this study proposes the use of an extended version of the heckman two step regression in which the first step adopts a multinomial logit model and the second step estimates the performance equation with the inverse mills ratio generated by the first step the empirical results show that csr positively associates with fp in terms of return on assets return on equity net interest income and non interest income in contrast csr negatively associates with non performing loans hence strategic choice is the primary motive of banks to engage in csr

ethical commitment financial performance and valuation an empirical investigation of korean companies a variety of stakeholders including investors corporate managers customers suppliers employees researchers and government policy makers have long been interested in the relationship between the financial performance of a corporation and its commitment to business ethics as a subject of research the relations between business ethics and corporate valuation has yet to be thoroughly quantified and investigated this article is an effort to amend this inadequacy by demonstrating a statistically significant association between ethical commitment and corporate valuation measures consistent with anecdotal evidence we have found a significant association between the ethical commitment of korean companies and their valuation on the korean stock market however the result reveals that the association between ethical commitment and financial performance is not significantly supported

health in the cities when the neighborhood matters more than income using a rich italian cross sectional dataset we estimate the effect of a neighborhood problems aggregate including pollution crime and noise on self assessed health presence of chronic conditions and limitations in daily activities we address the self selection of the residents in their neighborhoods as well as the possible endogeneity of income with respect to health through instrumental variable methods and several endogeneity tests the main novelty is the sound estimation of the neighborhood effect on health using observational data which has the advantage of providing general results that are not dependent on any experimental design this allows us to fully compare the neighborhood effect with the traditional socioeconomic determinants of health our main findings are that low quality neighborhoods are strongly health damaging this effect is comparable to the primary upper secondary education health differential and is even higher than the impact that poor economic circumstances have on health

socially responsible investment in the spanish financial market this paper reviews the development of socially responsible investment sri in the spanish financial market the year 1997 saw the appearance in spain of the first sri mutual fund but it was not until late 1999 that major spanish fund managers offered sri mutual funds on the retail market the development of sri in the spanish financial market has not experienced the high levels of development seen in other european countries such as france or italy where interest in sri began during the same period this paper presents an analysis of the impact of sri mutual funds managed by spanish fund managers comparing the evolution of managed assets and number of investors we also analyse the investment strategies adopted by these funds which mainly use negative screening criteria and the participation of non governmental organisations as institutional investors an analysis of the take up of socially responsible investment in the spanish financial market shows majors deficits in this process this is due to spanish investors having limited sensitivity to social issues and knowledge of sri and a lack of development of sri investment strategies such as engagement or shareholder activism by fund managers furthermore the take up of sri mutual funds in the spanish financial market coincided with a fall in the stock market at the beginning of the 21st century we conclude with an analysis of the relationship between sri and corporate social responsibility csr

corporate social investments do they pay the stock market reaction to two very different corporate social investments the 1977 sullivan principles adoption announcement and the 1990 mcdonald s corporation environmental statement is explored a market model event study methodology is employed using daily stock returns the results are that the stock market appears to have ignored the 1977 announcement but rewarded the 1990 event future research and possible managerial implications are discussed

the financial impact of iso 14001 certification top line bottom line or both it is not easy being green but it does beg the question does being green pay off on the bottom line unfortunately that question of becoming iso 14001 to reap financial benefit remains widely unanswered in particular corporate practice is interested in how environmental management impacts firms finance through top line impact bottom line impact or both as this paves the way for an investment of environmental management as current findings are mixed our study tracks financial performance of publicly traded us firms between 1996 and 2005 to test whether iso 14001 leads to improved financial performance employing a rigorous event study approach we compare certified firms to different control groups based on several matching criteria that include industry size and or roa in the short run iso 14001 certification makes only a minor impact on the bottom line according to our results however these same results show a significant financial improvement over the long haul with iso 14001 certification additionally this long term improvement also makes a significant improvement in top line performance thus we conclude that environmental management pays off along both dimensions

an empirical examination of institutional investor preferences for corporate social performance this study investigates the pattern of institutional shareholding in the u k and its relationship with socially responsible behavior by companies within a sample of over 500 uk companies we estimate a set of ownership models that distinguish between long and short term investors and their largest components and which incorporate both aggregated and disaggregated measures of corporate social performance csp the results suggest that long term institutional investment is positively related to csp providing further support for earlier studies by johnson and greening 1999 academy of management journal 42 564 576 and graves and waddock 1994 academy of management journal 37 1034 1046 disaggregation of csp into its constituent components suggests that the pattern of institutional investment is also related to the form which csp takes investigation of the impact of investment screens on the selection of stocks suggests that long term institutional investors select primarily through exclusion rejecting those firms which have the worst csp