No matter how one refers to it — “ESG” (environmental, social and governance), “responsible” or “sustainable” investing — the world is paying increased attention to investment decisions that include nonfinancial factors. Research examines if investment managers invest their clients’ capital as responsibly as they pledge to.
The value of a culture of integrity: Using linguistic analysis of public communications, researchers studied which CEOs are likely to mislead investors and fail to follow through on promises. The CEO behavioral integrity index provides systematic evidence of the consequences of low integrity — here’s what it means for auditors and the bottom line.
Conventional wisdom is that active-fund managers are paid to be contrarians; they take risks and go against trends. But new research shows that sometimes they’re the herd: In the bear market of February and March 2020, institutional investors amplified price crashes and volatility by fire-selling, and they focused on cash rather than ESG metrics.
Darden Professor Rich Evans recently published study of mutual fund managers’ performance which demonstrates that significantly different outcomes occur when employees get paid to compete against each other — versus when they are compensated for cooperating.
Exchange traded funds (ETFs) have grown in popularity as a tool for targeting specific groups of investments. How do they affect the market? Darden Professor Rich Evans and Maureen O’Hara of Cornell’s S.C. Johnson College of Business discuss industry ETFs and their influence on market efficiency.
The importance of a culture that respects different perspectives: What does political ideology have to do with mutual funds? Profit. Darden Professor Rich Evans’ research shows that funds managed by teams with diverse political views perform better than those with similar political beliefs. Here, he elaborates on the study and an important caveat.
Benchmarks are critical to decision-making. It stands to reason, then, that an investment decision should have its own benchmark: the cost of capital. Here, Darden Professor Michael Schill offers four principles to guide the investor in measuring risk and expected return to estimate the cost of capital.
Collection: Investing Insights
Another global financial crisis will come eventually, although when and why the next downturn will begin remains an unknown. So far, regulatory efforts have not eliminated the sources of financial instability.