A study on the ethical considerations in investors’ investment decisions

In the present fast changing economic environment, ethical investment or socially responsible investment has emerged as an important issue and drawn the attention of large number of investors. From the available literature it is seen that there is a great deal of disagreement among investors, companies, NGOs and academicians on what exactly constitutes ‘ethical investment', or ‘socially responsible investment. It is observed in many studies that the financial motives drive the investment decisions with much greater intensity than the moral values that may be possessed by the investors. This paper provides an overview of the Ethical convictions reflected in investor's investment decisions and tries to construct various forces that drive the investors for investing. Here we outline motives, history, and current best practices in the context of SRI. We also provide a thorough analysis of a wide set of studies that cover two key segments in this field. One is the internal core values the investor possesses in terms of knowledge, experience and aspirations and secondly the implementation of those faculties in the investment decision making. This study shows that most research studies find that socially responsible (SR) investments perform equal to conventional investments, but these findings are challenged by contradictory results from other studies. The results also indicate that there is a general understanding that financial investments are to gain financially and has insignificant role of moral values. Though there is a strong recognition of ethical issues, it is the financial benefit that is prevalent in majority. Considering the sample limitations and other limitations of the research this study provides the future researchers with a well-envisaged insight to the existing literature on SRI, thereby identifying gaps that might be closed by future research.