Socially Irresponsible Investment In The United States

Abstract

In this thesis, we provide evidence on the performance of an unethical investment strategy during the 21st-century. We examine publicly traded US companies engage in one of these five industries; gambling, oil/gas, alcohol, tobacco, and defense. Using a sample of approximately 200 unethical stocks from 2001-2016, we hypothesize that the unethical portfolio does not outperform the market and SRI comparables and that there is a clear trend before and after the global financial crisis in 2008. Consistent with the first hypothesis and contrary to previous research, we could not prove that the unethical portfolio generated any excess return over the market. Meanwhile, there is a clear trend before and after the financial crisis, whereas the unethical portfolio overperforms prior and underperforms the market and comparables post, due to the inclusion of oil/gas industry.