Foreign investors shun firms with poor social and environmental performance.
The article explores whether foreign investors care about a company's social responsibility when deciding to invest. They looked at data from 21 countries and found that companies with poor environmental and social records are less likely to attract foreign investors. This is especially true in countries with weak disclosure rules. Foreign investors prefer companies with high market turnover, economic growth, and large size, but dislike high debt levels. This research sheds light on how social responsibility affects investment decisions in emerging markets.