Socially Responsible Firms and Stock Returns: Evidence from Japanese Constituents in FTSE4Good Index (Nikko Financial)

Abstract and Main Conclusion: This paper investigates whether market players appreciate socially responsible firms better than conventional ones with the view on corporate social responsibility factors.

Using a sample portfolio consisting of Japanese equities included in the FTSE4Good Index2, the paper estimates that the risk-adjusted performance is positive at a statistically significant level by applying regression analysis over the period 2001–2010 which includes the recent financial crises. Furthermore, robustness tests are performed by considering style biases, etc.

On behalf of Nikko Financial Intelligence, Inc. (Kan Nakajima)

The Board Director Training Institute (BDTI) is a "public interest" nonprofit in Japan dedicated to training about directorship, corporate governance, and related management techniques. It is certified by the Japanese government to conduct these activities as a regulated nonprofit. Read a summary about BDTI here, and see a menu of its services for both corporations and investors here.

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