Scandinavian Working Papers in Business Administration

Sustainable Investment and Corporate Governance Working Papers,
Sustainable Investment Research Platform

No 2010/10: The information search process of socially responsible investors

Jonas Nilsson (), Anna-Carin Nordvall () and Sofia Isberg ()
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Jonas Nilsson: Umeå School of Business at Umeå University
Anna-Carin Nordvall: Umeaå School of Business at Umeå University
Sofia Isberg: Umeå School of Business at Umeå University

Abstract: Largely fuelled by an increasing social and ethical concern among private investors, socially responsible investment (SRI) has, in many ways, gone from having a marginal role to becoming a ‘mainstream’ financial service in recent years. SRI is an investment process that, in addition to the ‘ traditional ’ fi nancial objective of investment, also uses social, ethical or environmental (SEE) criteria when making investment decisions. However, despite the growth of the market for SRI profi led mutual funds, very little research has been carried out with the objective of understanding the decision-making process of private SR-investors. In order to address this gap in the literature, this article addresses one stage in the SR-investor decision-making process: consumer prepurchase information search. Using a sample of 369 SR-investors, the results of the study indicate that SR-investors search more for SEE information, such as the criteria used for exclusion of stocks than for ‘regular’ financial information such as past financial return and level of risk. Moreover, the study also indicates that involvement and perceived knowledge with regard to both financial and SEE issues impact the nature of the information search process of private SR mutual fund investors.

Keywords: Socially responsible investment; Ethical investment; Information search; Private investors; Mutual funds

14 pages, June 16, 2010

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