Todd M. Shank

“Doing Well While Doing Good” Revisited: A Study of Socially Responsible Firms' Short‐Term versus Long‐term Performance

This article reexamines the “doing well while doing good” debate within the financial management literature, using comparisons among socially responsible mutual funds (SRMF(, the NYSE Composite Index, and a portfolio made up of firms most valued by SRMF managers )MostSRF(. The performance of MostSRF did no better or no worse than the over all market or SRMF in three to five year comparisons. However, results from the ten‐year performance comparison refute earlier studies and indicate that the market prices social responsibility characteristics in the long run. Given MostSRF out performed the other two indices in this time line, a new paradigm for understanding the impact of SRI is revealed.

Is it Better to be Naughty or Nice

Investment analysts are trained that the primary responsibility of managers in public companies is to maximize shareholder wealth by raising the value of their stock holdings without regard for any greater societal good. Only recently have analysts begun to recognize the influence of various external stakeholders on the financial viability of corporations that violate ethical norms. The result is an increasing interest in socially responsible investing, defined as the process of integrating personal values and societal concerns into investment decision making. This orientation to the issue considers both academic research and popular press treatments. Careful selection of socially responsible investments over broader market investments may actually represent a value-maximizing strategy. Financial analysts will need to move beyond a laundry list of mutual funds in their dealings with investors.

Do investors benefit from good corporate governance

Purpose – The purpose of this paper is to examine the continuing search for evidence that good corporate governance leads to positive organizational outcomes, and it presents a unique perspective on this issue based on firm size.Design/methodology/approach – The study utilized a comprehensive measure of governance as well as a risk‐adjusted measure of share price in its comparisons between companies known for good governance and broader markets composed of similar‐sized firms.Findings – The findings show evidence of better risk‐adjusted performance across all recent sub‐periods (three‐, five‐, and ten‐year) for the firms in the smallest market capitalization category. Better risk‐adjusted returns were earned for only the ten‐year period for the largest firms and the overall US market. Mid‐cap stocks were not significant in any of the three periods studied. The fact that the small cap stocks showed significance for all three sub‐periods indicates the relationship between good corporate governance practices...

Nonlinear Dependence in Gold and Silver Futures: Is it Chaos?

We test for the presence of low-dimensional chaotic structure in the gold and silver futures markets. While we find strong evidence of nonlinear dependencies, the evidence is not consistent with chaos. Our test results indicate that ARCH-type processes, with controls for contract-maturity effects, generally explain the nonlinearities in the data. We also make a case that employing seasonally adjusted price series is important to obtaining robust results via some of the existing tests for chaotic structure.

Regional Financial Crises and Equity Market Reactions: The Case of East Asia

In this paper we investigate the relationship between regional financial turmoil and equity markets of three emerging Asian economies: Indonesia, Malaysia, and Thailand. The study focuses on the contagion of the regional banking and financial difficulties to security markets in these three countries. The VAR and bivariate GARCH model results show that, once the regional financial crisis spreads, equity markets decline and exacerbate the crisis. The speed with which equity markets respond to the regional liquidity and financial turmoil is quite similar despite disparate market capitalization and GDP of the regional economies. The volatility becomes persistent and the equity market and financial sector volatility appear to fuel further volatility in one another. However, we show that Malaysia, the most developed of the sample markets, weathered the crisis quicker and more successfully than the other two. These results have important ramifications for financial market participants, local regulators, and international governing bodies such as the IMF.