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International Business Professors Win Moskowitz Prize
October 12, 2011
Doing the right thing can reap rewards. A study by two University of South Carolina international business professors has shown that socially responsible companies pay higher returns to investors.
|Dr. Chuck Kwok
|Dr. Omrane Guedhami
The study, conducted by Dr. Chuck Kwok and Dr. Omrane Guedhami, won the 2011 Moskowitz Prize for Socially Responsible Investing, the only award given internationally to recognize outstanding quantitative research in sustainable and responsible investing (SRI). The prize is given by the Center for Responsible Business at UC Berkeley’s Haas School of Business.
Published in the September issue of the Journal of Banking and Finance, the study showed that socially conscious firms have a lower cost of equity capital. Kwok and Guedhami, along with two co-authors, were honored for their research Oct. 3 at a national SRI conference in New Orleans. A $5,000 award accompanied the prize.
“It’s an honor to win the Moskowitz Prize,” Kwok said. “Not only does it affirm the importance of our research, but it brings distinction to the Darla Moore School of Business and its focus on sustainable enterprise.”
Co-authors on the article are Dr. Sadok El Ghoul from the University of Alberta and Dr. Dev Mishra from the University of Saskatchewan.
Using data from 2,809 U.S. firms from 1992 to 2007, the researchers found that companies with better corporate social responsibility scores also had lower cost-of-equity financing. The findings remained consistent under a variety of tests.
“A firm’s commitment to improving responsible employee relations, environmental policies and product strategies can lead to a substantial reduction in its cost of equity,” Guedhami said. “That’s valuable information not only for firms, but also security analysts, portfolio managers and socially conscious investors.”
The Moskowitz Prize has been awarded since 1996. The journal article can be found online at http://sciencedirect.com/science/article/pii/S0378426611000781.
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