Research Insights

In recent years, the appeal of socially responsible investing (SRI) has grown significantly among investors who are not only seeking financial returns but might also be motivated by a desire to support positive social and environmental outcomes. SRI funds position themselves as instruments of driving ESG change, claiming to invest in companies with strong ESG practices. Some funds further assert that they actively work to improve the ESG behaviors of firms within their portfolios. However, a key question remains: Do these funds genuinely influence corporate behavior, or are they merely curating portfolios of companies that already demonstrate stronger ESG credentials? Heath et al. (2023) offer an in-depth examination of this issue.

Climate change demands regulatory action from governments, yet most countries’ climate efforts are insufficient. A common concern is that firms’ lobbying activities partly hinder more aggressive climate actions, as they seek to influence politicians or policymakers to undermine, delay, or avoid pro-climate regulations or policies. Despite this fact, our understanding of the scope, motivation, and impact of firms’ climate lobbying activities is limited. Leippold et al. (2024) address this gap with a comprehensive analysis, offering insights into the following aspects.

The complexity of financial products has led to widespread recognition of the need to protect financial consumers. Many countries have systems in place that allow consumers to file complaints against financial service providers with regulators. Whereas some jurisdictions keep this information private for internal regulatory purposes, others have begun to disclose it publicly. Proponents of public disclosure argue it educates consumers and helps them make informed decisions. A notable example is the U.S. Consumer Financial Protection Bureau’s (CFPB) initiative to disclose consumer complaints against banks. However, this approach can potentially harm the reputation of financial institutions if the complaints are not presented with adequate context, leading to misleading perceptions.

Environmental protection is traditionally seen as a state responsibility, and the private market is meant to focus on creating shareholder value rather than preserving nature. Still, market-based solutions such as green investing have emerged. The research addresses whether green investment funds can influence firm-level environmental performance in relation to the presence of state environmental- and shareholder protection policies.

Over the last decade, researchers and practitioners have become increasingly interested in how firms can leverage managerial responses (MRs) to capitalize on positive reviews and mitigate the potential harm caused by negative reviews. Intuitively, companies should respond to negative reviews (MR-N) to mitigate the damage they cause, while offering more general responses to positive reviews (MR-P). However, the proportion of MR-P on TripAdvisor has consistently increased since 2006 and has surpassed the percentage of MR-N since 2013. Two key questions remain: Given the constraints of limited resources, should managers prioritize soothing unsatisfied customers or pleasing satisfied ones? What are the effects of MRs on customer review ratings and financial outcomes?

Increased trading in dark venues around earnings announcements offers advantages to businesses and markets that can allay regulators’ concerns

If the many functions of digital social media networks could be summed up in one word, it would likely be “sharing”. Through a myriad of apps and platforms, we share our thoughts, feelings, opinions, ideas, and more – with our friends and family, with our online social circles, with strangers, and even with companies.

New research shows that traders can bypass capital controls by transporting goods across borders by truck to reap currency carry rewards. We look at how they do it and what the consequences are

[This article discusses domestic violence. If you or someone you know is experiencing domestic violence, you are not to blame, what is happening is not your fault. There are numerous resources and refuges available to you. They are listed at the end of this article.]