Publications

Nofsinger, J. R., Sulaeman, J., & Varma, A. (2019). Institutional investors and corporate social responsibility. Journal of Corporate Finance, 58, 700-725. https://doi.org/10.1016/j.jcorpfin.2019.07.012
Despite the growing interest in sustainable investments, our understanding of how various aspects of CSR affect institutional investors’ portfolios remains limited. This study provides empirical evidence supporting the notion that economic incentives play a key role in shaping institutional investors’ preferences for a company’s Environmental (E) and Social (S) performance. Utilizing institutional investors’ stock holdings data, we observed a trend where institutions tend to reduce their holdings in firms with weaker ES performance, yet they appear largely indifferent to firms with strong ES performance. This suggests that firms with significant ES weaknesses face higher downside risks, including the potential for bankruptcy or delisting from stock exchanges due to poor performance. In the case of firms with strong ES performance, we conclude the investors’ ambivalence arises from a lack of clear economic benefits associated with such performance.

Agarwal, S., Deng, Y., & Li, T. (2019). Environmental regulation as a double-edged sword for housing markets: Evidence from the NOx budget trading program. Journal of Environmental Economics and Management, 96, 286-309. https://doi.org/10.1016/j.jeem.2019.06.006

In this paper, we investigate the impact of the NOx Budget Trading Program (NBP), a cap-and-trade system, on housing markets. Our analysis reveals that the effect of the NBP on housing prices in participating states varies, growing in low-manufacturing-intensity regions and decreasing in high-manufacturing-intensity regions. We propose two channels—health and labor-market channels—to explain this phenomenon. Specifically, for the labor-market channels, we suggest that the NBP discourages manufacturers from employing labor due to increased production costs, resulting in reduced housing demand and a decline in housing prices in high-manufacturing-intensity areas. Additionally, we found that in high-manufacturing-intensity areas, loan application volume declined, rejection rates increased, and the probability of loan default rose, contributing to the overall decrease in the housing market of those areas.

Lam, S. S., Zhang, W., & Chien, C. Y. K. (2018). Can corporate social responsibility fill institutional voids. In P.S Hoffmann (Ed.), Firm Value-Theory and Empirical Evidence (2nd ed.). IntechOpen. http://doi.org/10.5772/intechopen.72333

Our study responds to the need for a deeper comprehension of CSR (Corporate Social Responsibility)’s underlying mechanisms, especially at the institutional level. Using 134,823 observations of 2542 firms across 44 countries from 2009 to 2014, we observed that CSR has a more significant positive impact on firm value in markets where there are significant institutional gaps (e.g., absence of financial reportage or monitoring systems). In strong institutional frameworks, however, the results were mixed; for these results, we recommend firms pursue CSR initiatives that are likely to enhance value and align well with their existing core competencies.

Agarwal, S., Rengarajan, S., Sing, T. F., & Yang, Y. (2017). Nudges from school children and electricity conservation: Evidence from the “Project Carbon Zero” campaign in Singapore. Energy Economics, 61, 29-41. https://doi.org/10.1016/j.eneco.2016.10.014

In our study, we explore the effectiveness of children in influencing their parents’ energy consumption behavior. Utilizing the “Project Carbon Zero” campaign in Singapore as a quasi-experiment, we investigate the impact of schoolchildren’s nudges on conveying electricity conservation messages to homes. Our results, based on a 2km home–school distance identification, show that families within 2km of participating schools (treatment group) used 1.8% less electricity during the contest compared to those outside this zone (control group). Additionally, the electricity savings persisted, with an estimated marginal reduction of 1.6% in the post-campaign months. These findings suggest that, as an alternative to monetary interventions, we, as policymakers and energy conservation advocates, can effectively employ schoolchildren’s nudges in public campaigns to drive behavioral changes in electricity conservation among families.