Essays in Finance: Social Responsible Investment and its Policy Implications

Abstract

This thesis is based on the integration of three independent essays that interlinked in the topics of socially responsible and economic considerations into financial decision-making.

The first text examines Socially Responsible Investment (SRI), highlighting the importance of transparent reporting of socially responsible information and how it bridges information asymmetry in financial markets. The text shows the financial benefits of early and transparent engagement in voluntary disclosure practices, contributing to an understanding of the relationship between sustainability and financial performance. Ad-ditionally, the text discusses the significance of reassessing non-monetary objectives and considering on disclosing socially responsible information in the context of the evolving regulatory frameworks. By defining the research questions on the impact of reporting such information on a company’s performance, particularly with focus on the timing of report-ing, the text addresses a gap in understanding the dynamics of disclosure. Furthermore, it examines the direct impact of reporting socially responsible information on corporate financial performance, showing how self-reporting can affect performance independently of sustainability scores.

In the second text, the focus is on the significance of health and safety (H&S) policies in driving organisational and economic benefits for the firms. I empirically analyse the impact of H&S policies, particularly those for employees, on firm valuation, the text highlights the economic and strategic benefits of implementing a safe workplace for em-ployees. It shows the implementation of H&S investments in promoting public health and economic performance, calling for an integrated perspective that views economic policies as an essential part in the firms. Additionally, the text explores the impact of significant events such as the COVID-19 pandemic and the enactment of the Affordable Care Act on the relationship between H&S policies and company valuation.

Finally, the third text studies the European Central Bank’s (ECB) unconventional monetary policy measures, particularly the Corporate Sector Purchase Programme (CSPP), aimed at aligning with climate objectives. It examines the challenges arising from the intersection of environmental and monetary goals, highlighting potential trade-offs in achieving financial stability and ecological objectives. Through a robust analysis, the text shows light on the difficulties of balancing environmental sustainability with monetary policy objectives, and shows the broader implications for financial markets and economic resilience. In addition, the text investigates the liquidity characteristics of ECB’s acquisitions within the CSPP and their integration into the broader monetary policy framework, providing an understanding of the trade-offs faced by the ECB in pursuing environmental objectives while maintaining market liquidity.

Overall, these texts collectively contribute to an understanding of the relationship between sustainability, financial performance, and regulatory frameworks in shaping contemporary economic landscapes. They provide specific examples and findings to illustrate key points, emphasise the relevance and significance of their contributions to advancing understanding in the field, and present a linked argument that summarises insights from all three texts. As well, the three works present a perspective on the challenges and opportunities associated with integrating sustainability considerations into financial decision-making processes, providing valuable insights for policymakers, investors, and corporate leaders on the complexities of sustainability and financial governance.

Date of Award	22 Jan 2025
Original language	English
Awarding Institution	University of Bath
Supervisor	Winifred Huang (Supervisor), Charles Larkin (Supervisor) & David Newton (Supervisor)