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Sustainable institutional investment in the COVID-19 pandemic

Author

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  • Lai T Hoang
  • Joey Wenling Yang

Abstract

This article examines institutions’ investment strategies towards environmental and social (E&S) stocks in the first quarter of 2020, coinciding with the COVID-19 pandemic outbreak. Backed with both institutional- and firm-level analyses, we find that institutional investors shift towards stocks with higher E&S performance. The high E&S portfolios exhibit lower risk and return characteristics, outperforming (underperforming) their peers on market-down (-up) days. Further analysis shows this shift towards E&S is not a permanent transition, rather it reversed with the market rebound in the second quarter, thereby suggesting that the underlying driver of institutional E&S investment strategy in the pandemic is downside-risk protection. JEL Classification: G01, G12, G23, M14

Suggested Citation

  • Lai T Hoang & Joey Wenling Yang, 2023. "Sustainable institutional investment in the COVID-19 pandemic," Australian Journal of Management, Australian School of Business, vol. 48(1), pages 3-37, February.
    • Handle: RePEc:sae:ausman:v:48:y:2023:i:1:p:3-37
    DOI: 10.1177/03128962221078943
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    More about this item

    Keywords

    Abnormal return; COVID-19; downside risk mitigation; E&S; institutional investors; institutional ownership; pandemic;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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