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What drives retail portfolio exposure to ESG factors?

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  • D’Hondt, Catherine
  • Merli, Maxime
  • Roger, Tristan

Abstract

Using both survey and trading data from 9,286 retail investors for the 2005–2011 period, we highlight the impact of financial literacy and risk tolerance on retail stock portfolio exposure to environmental, social and corporate governance (ESG) factors. Our results also reveal that the three ESG factors are not homogeneous and should be considered separately. Lower exposure to ESG factors during the crisis period suggests that ESG investing is a luxury good for most investors.

Suggested Citation

  • D’Hondt, Catherine & Merli, Maxime & Roger, Tristan, 2022. "What drives retail portfolio exposure to ESG factors?," Finance Research Letters, Elsevier, vol. 46(PB).
    • Handle: RePEc:eee:finlet:v:46:y:2022:i:pb:s1544612321004505
    DOI: 10.1016/j.frl.2021.102470
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Ann Susan Thomas & Ambili Jayachandran & Ajithakumari Vijayappan Nair Biju, 2024. "Strategic mapping of the environmental social governance landscape in finance – A bibliometric exploration through concepts and themes," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(5), pages 4428-4453, September.
    2. Nektarios Gavrilakis & Christos Floros, 2023. "ESG performance, herding behavior and stock market returns: evidence from Europe," Operational Research, Springer, vol. 23(1), pages 1-21, March.
    3. Pavel Ciaian & Andrej Cupak & Pirmin Fessler & d'Artis Kancs, 2022. "Environmental-Social-Governance Preferences and the Holding of Crypto-Assets," EERI Research Paper Series EERI RP 2022/07, Economics and Econometrics Research Institute (EERI), Brussels.
    4. Tang, Xiaobo & Yao, Xingyuan & Dai, Ruyi & Wang, Qian, 2024. "Does green matter for crowdfunding? International evidence," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 92(C).
    5. Bazrafshan, Ebrahim, 2023. "The role of ESG ranking in retail and institutional investors' attention and trading behavior," Finance Research Letters, Elsevier, vol. 58(PC).
    6. Pavel Ciaian & Andrej Cupak & Pirmin Fessler & d’Artis Kancs, 2022. "Environmental and Social Preferences and Investments in Crypto-Assets," JRC Research Reports JRC129919, Joint Research Centre.
    7. Jimnee Deka & Meghna Sharma & Nishant Agarwal & Kamesh Tiwari, 2023. "Linking ESG-Investing Consciousness, Behavioral Biases, and Risk-Perception: Scale Validation with Specifics of Indian Retail Investors," European Journal of Business Science and Technology, Mendel University in Brno, Faculty of Business and Economics, vol. 9(1), pages 70-91.
    8. Victoria Gevorkova & Ivan Sangiorgi & Julia Vogt, 2024. "Cleansing Investor’s Conscience: The Effects of Incidental Guilt on Socially Responsible Investment Decisions," Journal of Business Ethics, Springer, vol. 193(1), pages 89-114, August.
    9. Kumar Manaswi & Archana Singh & Vikas Gupta, 2023. "Building a Better Future with Sustainable Investments: Insights from Recent Research," Indian Journal of Human Development, , vol. 17(2), pages 320-343, August.
    10. Capelli, Paolo & Ielasi, Federica & Russo, Angeloantonio, 2023. "Integrating ESG risks into value-at-risk," Finance Research Letters, Elsevier, vol. 55(PA).
    11. Lee, King Fuei, 2023. "The Role of Catering Incentives in ESG Disclosure," MPRA Paper 120930, University Library of Munich, Germany.

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    More about this item

    Keywords

    ESG factors; Crises; Financial literacy; Risk tolerance; Retail investors;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G40 - Financial Economics - - Behavioral Finance - - - General

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