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Inclusions in and Exclusions from the S&P 500 Environmental and Socially Responsible Index: A Fuzzy-Set Qualitative Comparative Analysis

1
Department of Financial Economics and Accounting, Universidade de Santiago de Compostela, Santiago de Compostela 15782, Spain
2
Department of Business, Universidade da Coruña, A Coruña 15071, Spain
*
Author to whom correspondence should be addressed.
Sustainability 2019, 11(4), 1211; https://doi.org/10.3390/su11041211
Received: 28 December 2018 / Revised: 10 February 2019 / Accepted: 19 February 2019 / Published: 25 February 2019
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PDF [340 KB, uploaded 25 February 2019]

Abstract

Socially responsible investment (SRI) indices provide an interesting opportunity to analyse the links between corporate financial performance (CFP) and corporate sustainability performance (CSP). However, few studies focus on the antecedents of inclusions in and exclusions from SRI indices. Specifically, the implications of corporate sustainability disclosure (CSD) have been largely ignored in this field. Furthermore, previous literature on the CSP-CSD-CFP links shows inconclusive results that have been attributed to both methodological and measurement problems, which suggest the existence of asymmetry, equifinality and complexity amongst these links. This study targets two under-researched areas regarding the determinants of changes in the composition of SRI indices, and the effects of CSD on CSP. This study also attempts to overcome the methodological and measurement limitations of previous studies on the CFP-CSD-CSP links. The study presents a fuzzy-set qualitative comparative analysis (fsQCA) to explore how different combinations of CFP and CSD indicators are related to inclusions in an SRI index (assumed as expressions of a good CSP), and exclusions from an SRI index (equivalent to a poor CSP). The empirical results reveal that a combination of different CSD indicators is necessary, but not sufficient, to lead to the inclusion in or exclusion from an SRI index, and that CFP measures have asymmetrical effects on CSP. CSD is a relevant antecedent or precondition of CSP that can motivate changes in corporate behaviours towards an improved CSP. Poor CSP, leading to an exclusion from the index, is associated with poor CSD and a deterioration of CFP. The implications for researchers, business managers, SRI rating agencies and policymakers are derived. View Full-Text
Keywords: SRI indices; corporate sustainability performance; corporate sustainability disclosure; corporate financial performance; equifinality; asymmetry; complexity; fsQCA SRI indices; corporate sustainability performance; corporate sustainability disclosure; corporate financial performance; equifinality; asymmetry; complexity; fsQCA
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited (CC BY 4.0).
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Pineiro-Chousa, J.; Romero-Castro, N.; Vizcaíno-González, M. Inclusions in and Exclusions from the S&P 500 Environmental and Socially Responsible Index: A Fuzzy-Set Qualitative Comparative Analysis. Sustainability 2019, 11, 1211.

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