ethical or unethical decision making

1. A
Research Project
on
Role of Personal Value in Investment Decision
Submitted to
LOVELY PROFESSIONAL UNIVERSITY
Department of Management
In partial fulfillment of the requirements for the award of degree of
BACHELOR OF COMMERCE
LOVELY FACULTY OF BUSINESS AND APPLIED ARTS
LOVELY PROFESSIONAL UNIVERSITY
PHAGWARA
2013-14
Supervised by
Dr. Afzalur Rahman
Submitted by
Priya Bansal-11101872
Neeraj Singh - 11110503
Harpreet Khinda -11107324
Aniket Acharya - 11108598
i

2. TABLE OF CONTENT
Sr. No. Particulars Page No.
DECLARATION
ACKNOWLEDGEMENT
ABSTRACT
I. INTRODUCTION
I.1 Personal Values
I.2 Socially Responsible Investing
I.2.1 Motivations For SRI
I.2.2 Socially Conscious
I.3Green Shares/Green Chip Stocks
I.4Ethical Investing
I.5Background
1
2
2
4
5
6
7
II. LITERATURE REVIEW 8
III. RESEARCH METHODOLOGY
III.1 Need and significance
III.2 Objectives of study
III.3 hypothesis
III.4 Research Design
III.5 Data analysis tools
III.6 Limitation of study
12
12
12
12
15
16
IV. DATA ANALYSIS AND INTERPRETATION 17
V. CONCLUSION 36
VI. REFERENCES 38
VII. ANNEXURE – I i
ANNEXURE – II ii
ii

3. LIST OF TABLES
S. No. Table title Page No.
III.1 Composition of participants 19
III.2 Positive factors 20
III.3 Negative factors 21
IV.1 Positive variables in excel 24-25
IV.2 Factor analysis of 4.1 using SPSS 26-27
IV.3 Negative variables in excel 31-32
IV.4 Factor analysis of 4.3 using SPSS 33-34
IV.5 Result of question 2 37
IV.6 Investment in different cases 39
iii

4. DECLARATION
We hereby declare that the project work entitled “Role of Personal Values in Investment
Decision” submitted to the lovely professional university, is a record of an original work done by
us under the guidance of Dr. Afzalur Rahman.
This work has been found satisfactory in terms of scope, quality and presentation. Project work
is submitted in the partial fulfillment of the requirement for the award of bachelor in commerce.
The results embodied in this project have not been submitted to any other university or institute
for the award of any degree or diploma.
Checked and approved by
Dr.Afzalur Rahman
Priya Bansal - 11101872
Neeraj Singh - 11110503
Harpreet Khinda - 11107324
Aniket Acharya - 11108598
iv

5. v
ACKNOWLEDGEMENT
No work is complete without encouragement, support and help from other persons. The project
saw the day of light with the help of some great person. We are very indebted to these wonderful
people for their inspirational support. Firstly we wish to express sincere thanks to our mentor Dr.
Afzalur Rahman, faculty of business, lovely school of management, lovely professional
university, Punjab for his patience and noble guidance. His keen interest and enthusiasm in the
progress of our research work harder and give best possible results, so we are deeply indebted to
him.
We express our attitude to Mr. Shounak Das, faculty of business, lovely professional university
for their kind interest in our research. We would also like to express deeply gratitude to all
Faculty Members, Ms. Pooja Kansra for their kind support and encouragement for our research
endeavor.
We are also grateful to all authors and publisher of the various scholarly works, which formed
the basis for proceeding further with the present task.
Finally, we deeply pay my thanks and regard to our motivators, parents for providing us steadfast
and unflinching moral support which always inspire us to work harder throughout life.
Dated: - 28 /4/2014

6. Chapter1:
INTRODUCTION

7. INTROODUCTIOON
I.1 Perssonal Valuues
Persons’
values a
participan
participan
considere
different
company
option th
company
ethical valu
at the time
nt and asked
nt that ther
ed ethical an
type of ret
y, in second
he unethical
y’s case.
ues can be
of investm
d their inves
e are two t
nd the other
turn is offe
option the u
company g
judged by
ment decision
stment decis
types of com
r is engaged
ered to the
unethical co
gives much m
their investm
n three hyp
ion for each
mpany one
d in ethical
participant.
ompany give
more return
ment decisio
pothetical si
h situations.
is engaged
or normal.
One is equ
es slightly h
in comparis
ons. To me
ituations are
For this it is
in the bus
To judge th
ual in case
higher return
son of the e
asure the et
e offered to
s informed t
iness that i
he decision
of both typ
n and in the
ethical or ge
thical
o the
to the
s not
three
pe of
third
eneral
Strictly e
always av
or genera
will inve
ethical inves
void the com
al companie
st always co
stors are tho
mpanies that
es. On the o
onsidering th
ose investors
t is engaged
other hand th
he return on t
s who are co
in unethical
he person w
the investme
onscious reg
business an
whose financ
ent.
garding the s
nd activities
ial goals are
social values
and chose et
e more impo
s and
thical
ortant
1

8. I.2 Socially Responsible Investing
Ethical investors encourage the ethical business and practices. They encourage the corporate
society to take initiative to protect environment, consumers’ protection and human rights. They
make the corporate world to think about the effect of his working in the society and the world as
a whole. Increase in the socially responsible investors automatically discourages the business
related to alcohol, tobacco, gambling, pornography, weapons, and/ or military.
Socially responsible investors are aware of the issues of environment, social justice and
corporate governance and they take care of their investment directly or indirectly (i.e. through
mutual funds).
"Socially responsible investing" is one of several related concepts and approaches that influence
and, in some cases govern, how asset managers invest portfolios. The term "socially responsible
investing" sometimes narrowly refers to practices that seek to avoid harm by screening
companies included in an investment portfolio. However, the term is also used more broadly to
include more proactive practices such as impact investing, shareholder advocacy and community
investing.
I.2.1 Motivation for socially responsible investing
If we discuss about the motivational factor to invest in corporate that is socially responsible, it
can be discussed with the following points.
• Return on investment
A return on investment is the most important criteria for any investment decision. Theoretically
it is argued that socially responsible investors must be willing to accept a lower rate of return.
The lower rate of return is also referred as an “ethical penalty”. And on the other hand it is also
supposed that the socially responsible corporate has to incur extra cost to maintain socially
responsible status. However the fact is different a socially responsible corporate is highly aware
of the socially desirable behavior that makes these firm more attractive. These firms are subjects
to the greater scrutiny and also they operate funds in more efficient manner therefore more than
2

9. half of the investors expect socially responsible corporate less risky and gives better return than
other corporate.
When the investment portfolio is investigated by the researcher they found very few differences
in return between conventional and socially responsible investments. Interestingly, one study
found that the primary reason of few differences is that the composition of investments in
socially responsible funds did not differ significantly from that of the general market. On the
other hand, there is significant anecdotal evidence supporting an ethical penalty.
• Social change
Ethical investors are interested in social changes. They invest ethically to participate in the social
changes. For example an ethical investor may want to purchase the share of environmental
friendly business practice to motivate the corporation to do more environmental friendly business
practice. Although socially responsible investors may seek to change business practices, research
indicates that shareholder-based social changes are minimal.
Interestingly, socially responsible investors seem resolved to their limited ability to make
change. Lewis and Mackenzie (2000b) find that most socially responsible investors prefer a
passive approach to investing, in which investors utilize mutual funds that filter socially
inappropriate investments, rather than active investment, in which ownership rights are utilized
to lobby for change
• Personal satisfaction
Personal satisfaction also play role in the investment decision, however it is difficult to
investigate personal satisfaction with regard to investment decision.
For example, an investor might be interested in investing in the gaming industry because he or
she enjoys gaming and is familiar with the industry participants; however they are against of
those industries that are harmful for the environment. Conversely, another investor might find
gaming ethically improper and would not be comfortable investing in a mutual fund that includes
gaming stocks in its portfolio but they are ready to invest in industries that are harmful for the
environment. Evidence suggests that a broad range of non- economic factors affects the
investment decision find that fewer than half of investors sampled consider wealth maximization
3

10. to be the most important factor in an investment decision. Similarly, (Sparkes, 1998)finds that
35% of investors would invest ethically, even if returns were slightly lower than comparable
conventional funds. Lewis and Mackenzie (1999) asked socially responsible investors
generalized questions regarding their willingness to hold socially responsible investments given
ex-post evidence of investment return. They found most (94.8%) would not shift funds away
from socially responsible funds if the return were two percentage points lower and that only
35.8% would reduce socially responsible investments if the return were five percentage points
lower. While research supports the idea that socially responsible investors are willing to accept a
lower return, there is no specific evidence regarding what kind of values influence a specific type
of investment. For example, certain values might entice a socially responsible environmentalist
to invest in a "green" fund; however, that same fund might have little appeal to a socially
responsible investor focused on values related to pacifies
An investment that is considered socially responsible because of the nature of the business the
company conducts. Common themes for socially responsible investments include avoiding
investment in companies that produce or sell addictive substances (like alcohol, gambling and
tobacco) and seeking out companies engaged in environmental sustainability and alternative
energy/clean technology efforts. Socially responsible investments can be made in individual
companies or through a socially conscious mutual fund or exchange-traded fund (ETF).
I.2.2 "Socially conscious" investing is growing into a widely-followed practice, as there are
dozens of new funds and pooled investment vehicles available for retail investors. Mutual funds
and ETFs provide an added advantage in that investors can gain exposure to multiple companies
across many sectors with a single investment. Investors should read carefully through fund
prospectuses to determine the exact philosophies being employed by fund managers. Just
because an investment touts it as socially responsible doesn't mean that it will provide investors
with a good return.
A socially responsible investor differs in the intensity of their feelings regarding a single social
issue
4

11. A) Strong opposition
B) Moderate opposition
C) Low or negligible opposition
SRI differs in their degree of financial commitment i.e.
A) Entire portfolio to socially oriented investment
B) A part of portfolio to socially oriented investment
I.3 Green Shares/ Green Chip Stocks
Green shares are shares of companies whose primary business is beneficial to the environment.
Green chip stocks are generally likely to be concentrated in areas such as alternative energy,
pollution control, and carbon abatement and recycling. While the term is derived from “blue
chip,” which refers to a stock that is an industry leader and consistently profitable, a typical
green chip may have profitability challenges and a financial structure that is less stable than that
of a blue chip. But despite these issues, green chip stocks attract significant interest from
investors who are attracted to their “green” proposition and potential to be future market leaders
in an increasingly environment-conscious world.
Green chip stocks are typically more volatile than the broad market. Although investors are
usually willing to overlook their high valuations and financial limitations during bull markets,
they are less willing to do so during bear markets and recession.
The outlook for green chip stocks is also affected by the level of government subsidies and
support available to them and/or to users of their end products. While higher subsidy levels can
boost these stocks, reduced government can have an adverse impact on them.
For example, alternative energy stocks were among the best performers in the latter part of the
2003-07 global bull market, as the search for other energy sources assumed greater importance in
an environment of triple-digit crude oil. But these stocks had a sudden reversal of fortune in the
2008 bear market, as investors exited them in droves due to uncertainty about the global
recession and the collapse in conventional energy prices.
5

12. Solar power companies, a major sub-sector in the alternative energy space, were among the
hardest hit, as the recession in Europe forced cash-strapped governments to cut back the level of
subsidies offered to these companies. Spain, for example, accounted for half of the world’s new
solar power installation in terms of wattage in 2008, primarily due to generous government
subsidies designed to promote clean energy. But Spain’s worsening financial situation from 2009
onward led the government to severely curtail subsidies available for clean energy. As the
nation’s market for solar power contracted significantly from its 2008 peak, manufacturers of
solar panels and other components – which had ramped up production in anticipation of higher
demand – were stuck with huge amounts of excess inventory, leading to a substantial decline in
prices.
The growing popularity of green chip stocks has resulted in an increasing number of mutual
funds and exchange traded funds that only hold green investments. Despite the growing number
of alternatives available for investing in green chips, investors should ensure they understand the
risks involved before plunging into this potentially rewarding but volatile sector.
1.4 Ethical Investing
Using one's ethical principles as the main filter for securities selection, Ethical investing depends
on an investor's views; some may choose to eliminate certain industries entirely (such as
gambling, alcohol, or firearms) or to over-allocate to industries that meet the individual
guidelines.
Ethical investing is sometimes used interchangeably with socially conscious investing, but
socially conscious funds typically have one overarching set of guidelines that is used to select the
portfolio, whereas ethical investing brings about a more personalized result.
Ethical investing gives individuals the power to allocate capital toward companies that are in line
with their personal views, whether they are based on environmental, religious or political
precepts. Investors should keep in mind that "ethical" does not imply outperform. A good way to
start with an ethical investing policy is to write down the areas you want to avoid as well as
where you want to see your money invested. From there you can come up with an asset
allocation plan and begin researching individual securities and funds.
6

13. 1.5 Background
The origins of what we know as socially responsible investing date back hundreds of years. In
early biblical times, Jewish law laid down many directives about how to invest ethically. In the
mid-1700s, the founder of Methodism, John Wesley, noted that the use of money was the second
most important subject of New Testament teachings. For generation’s religious investors whose
traditions embrace peace and nonviolence have avoided investing in enterprises that profit from
products designed to kill or enslave fellow human beings. It is likely that Methodist and Quaker
immigrants brought the concept of social responsibility in investing to the new world. Quakers
have never condoned investing in war or slavery. The Methodists have been managing money in
the U.S. using what are now referred to as "social screens" for over two hundred years. The
deepest religious origins of socially responsible investing can still be seen in the wide spread
avoidance of "sin stocks" by the majority of socially conscious investors in the U.S. –
thosecompanies in the alcohol, tobacco and gaming industries.
But the modern roots of social investing can be traced to the impassioned political climate of the
1960s. During that tumultuous decade, a series of themes from the anti-Vietnam war movement
to civil rights, to concerns about the cold war and equality for women, served to escalate
sensitivity to issues of social responsibility and accountability. These movements broadened to
include management and labor issues and anti-nuclear sentiment during the 1970s. The ranks of
socially concerned investors grew dramatically through the 1980s as millions of people,
churches, universities, cities and states focused investment strategies on pressuring the white
minority government of South Africa to dismantle the racist system of apartheid. Then, with the
Bhopal, Chernobyl and Exxon Valdez incidents, and vast amounts of new information about
global warming and ozone depletion coming to the attention of the American public, the
environment moved to the forefront of socially concerned investors' minds. Most recently,
school killings and issues of human rights and healthy working conditions in factories around the
world producing goods for U.S. consumption have become rallying points for investors with a
dual objective for their investment capital.
7

14. Chapter 2:
Literature Review

15. LITERATURE REVIEW
A survey of literature was conducted on studies related to the “Role of personal values in
investment decision” in India specifically has been made to identify the state of the research
topic. The brief abstract of these studies have been given below.
ABSTRACT: (vitell, 1986)investigate the role ethical climate as moderator the relationship
personal variables and ethical sensitivity before the formation of ethical judgment among auditor
practitioners. Thus, the relationship between auditors’ personal values and ethical sensitivity will
be considered as a moderator by ethical climate. This study will extend general ethical decision
making model that suggested by them. Using MARS model which presented indicated the
interaction between environmental and individual factors influence individual behavior.
According to these models and to suit the local context and contribute to auditing literature.
ABSTRACT: (rosen, 1991)explored that the issue such as the demographic profile of SR-
investors through the Questionnaire answered by 1493 SR-investors. After examining the
perception of respondent regarding SR,founded that SR-investors were found to be younger and
better educated. Environmental and labor relations are important for corporate behavior to be
perceived as responsible by the investor.
ABSTRACT: (Webley, 1994)Investigated the relationship between values, beliefs and the
investment decision by Interviews with 100 people and a simulation on 84 students and finding
was People displaying “green” attitude are more positive towards SRI. Investment in SRI is
found to be price-elastic as investors are not willing to accept a much lower return than the return
that could be generated elsewhere.
ABSTRACT: (GOYEN, 1998)explored that “why investors invest in an ethically acceptable
nature conservation company”. In this Research paper Questionnaire answered by 739 investors
of the nature conservation company and founded that Environmental aspects were more
important than financial return in the decision to invest. The investor of the company was more
likely to be female, highly educated, and older and have higher household assets than the average
investor.
8

16. ABSTRACT: (LEWIS M. A., 1999)examined the relationship between ethical and financial
beliefs and the desires of SR-investors by taken through 20 semi-structured interviews. Through
this methodology, they found that SR-investors were not willing to sacrifice essential return for
social responsibility. Different strategies were used by investors to deal with this. For example,
investors invested only a small part in SRI or categorized their investments in a manner where
“surplus” money (as opposed to “core” money) was more likely to be traded away for social
responsibility.
ABSTRACT: (MACKENZIE, 2000(a))explored that after analysis of Questionnaire answered
by 1146 investors. 40% of socially responsible investors in the sample believe that SRI generates
lower return than “regular” investments. SR-investors would also keep their SR-investments
even if they perform worse than regular investments indicating that SR-investors are somewhat
price inelastic for losses.
ABSTRACT: (LEWIS M. a., 2000(b))examined the perception of 1146 investors by the way of
questionnaire and found that SR-investors support the current practices of avoidance of
companies considered “bad” and rewarding of companies considered to be “good” and less
support for more radical actions for change.
ABSTRACT: (SCHEUTH, 2003)explored that Socially responsible investing (SRI) has emerged
in recent years as a dynamic and quickly growing segment of the U.S. financial services industry
involving over $2 trillion in professionally managed assets. The socially responsible investment
industry in the United States is a young phenomenon. Even refer ring to it as an "industry" ten
years ago may have been a bit of a stretch. While it has grown dramatically in recent years, it is
an area of work, of study and of practical application. Finally founded that conventional and
ethical investor’s perception are more different that is highly depended on return factor.
ABSTRACT: (KRAUTER, 2004)examined 400 respondents regarding the environmental
awareness and education. The findings was that respondents were willing to invest in green share
only if the return is at par with normal shares, which shows that return on investment is more
dominant factor.
9

17. ABSTRACT: (GARDNER, 2004), in this research paper by 55 “conventional” and 54 “SRI”
investor’s response was taken through questionnaire method. The findings were that SR
investors care more for ethical issues than conventional investors (socio-demographic differences
between the groups were found).
ABSTRACT: (gevlin, 2007)examined the behavior or perception of respondent regarding
socially responsible investment through the way of research by questionnaire methodology and
after analysis found that 41% of sampled investors planned to add socially responsible
investments to their portfolio over the next 3 years.
ABSTRACT: (Nilsson, 2008)examined by 439 SR-investors and 89 regular investors through
questionnaires. The finding was both pro-social attitude as well as perception of financial
performance had an impact on how much the investor chose to invest in SRI. Moreover, women
and better educated investors invested a greater proportion of their portfolio in SRI.
ABSTRACT: (RILEY, 2010)investigates the role of personal values in an investment decision
in a controlled experimental setting. Participants were asked to choose an investment in a bond
issued by a tobacco company or a bond issued by a non-tobacco company that offered an equal
or sometimes lower yield investment More importantly, found that when the rate of return on a
tobacco-related investment exceeds the rate of return on an investment not involving tobacco by
1%, the intensity of participant concerns about the societal effects of their investment decisions
was especially important in determining investment choices. This finding indicates that
traditional wealth-maximization approaches, which do not consider the personal values of the
investor, omit an important factor that affects investment decisions.
ABSTRACT: (TALHAI, 2013) study examines the impact of organizational ethical climate on
perceived socially responsible investment (SRI) behavior with intention to engage in SRI as a
mediating variable. This study uses questionnaire to collect opinion from respondents.
Questionnaires were distributed to 320 fund managers of unit trust fund companies. On a
scrutiny of the returned questionnaires, it has been found that 73 are fit for further processing or
the usable rate of 22.81%. The analysis found that caring ethical climate has a significant and
positive direct effect on perceived SRI behavior. Besides, a caring ethical climate has a
significant and positive indirect effect on perceived SRI behavior with the intention to engage in
10

18. SRI. The study found a significant direct effect of intention on perceived SRI behavior.
However, the study has not found any evidence to support the association of instrumental ethical
climate with intention and perceived SRI behavior.
11

19. Chapter 3:
Research Methodology

20. RESEARCH METHODOLOGY
III.1 Need and Significance
The need of the study is to understand role of personal values in investment decision of a
potential investor. Socially responsible investing is a upcoming concept in the Indian industry
and this research has been carried to promote the ethical values amongst investors. The need is to
differentiate between conventional and ethical investors. The study also focuses upon the
perception of Indian investor of different average groups regarding return.
III.2 Research Objectives
To examine the extent of role of personal values while investing amongst different gender
groups.
To understand how different age group differ in intensity of their feelings regarding a single
social issue.
III.3 Hypothesis
H01: people give more importance to their ethical values then return on investment.
H02: personal beliefs play a major role in terms of the investment being ethical or non- ethical
H03: people always prefer to be socially responsible investor even if they get less return on
ethical investment.
III.4 Research Design
In this experiment, participants were given a questionnaire to fill. They were asked to make a
hypothetical investment based on two investment opportunities. Respondents were given Rs.1,
00,000 to invest and the options were as follows:
1. Tobacco or non-tobacco
2. Alcohol company. (retail + production) or non-alcohol
3. Armaments or non-armaments
4. Animal testing or non-animal testing
5. Company involved in human right exploitation or not involved
6. Company damaging environment or environment friendly company
12

21. As return on investment is an important factor while deciding the investment portfolio further
three cases were generated which were as follows:
Case1: Return on socially unethical companies were same as of socially ethical companies i.e. R
(-) =R (+)
Case2: Return on unethical company is greater than return on socially ethical company by 2%
Case3: Return on unethical company is greater than return on socially ethical company by 10%
Positive criteria: under positive criteria list of positive particulars like pollution control, health
care, recycling, alternative energy etc was made and respondents were asked to give response
from three alternatives
A-Strongly supporting
B-support if possible
C- Not a concerned area
Negative criteria: under negative criteria a list of negative particulars like animal testing,
gambling, alcohol, tobacco production etc were listed and respondents were asked response in
following way
A-Strict avoidance
B-Balanced approach
C-Of no interest
Participants:Ourrespondents consisted of 80 undergraduate, graduate and post graduate people.
Out of the 80 respondents 9 of the responses were unusable due to failure to answer in one or
more questions. Therefore 71 respondents provided answers to all of the questions.
13

22. Table 1: Participants/ Respondents
GENDER
AGE
MALE FEMALE TOTAL
25 or Below 7 6 13
25 - 35 15 16 31
35 - 45 11 4 15
45 or Above 8 4 12
TOTAL
41 30
71
Figure 1: Participants/ Respondents
7
15
11
8
6
16
4
4
0
5
10
15
20
25
30
35
25 or Below 25 - 35 35 - 45 45 or Above
FEMALE
MALE
14

23. III.5 Data Analysis Tools
Factor analysis
Factor analysis attempts to identify underlying variables, or factors, that explain the pattern of
correlations within a set of observed variables. Factor analysis is often used in data reduction to
identify a small number of factors that explain most of the variance observed in a much larger
number of manifest variables. Factor analysis can also be used to generate hypotheses regarding
causal mechanisms or to screen variables for subsequent analysis (for example, to identify co
linearity prior to performing a linear regression analysis).
1. Positive criteria
2. Negative criteria
Graphical method
Pie-charts and stacked column charts are also used to analyze the data.
Table 2: positive factors
Particulars
Environmental
protection
Pollution control
employment
s
e
Energy
Recycling
Ethical
practice
Alternativ
Health care
A
+3
+3
+3
+3
+3
+3
B
0
0
0
0
0
0
C
-3
-3
-3
-3
-3
-3
15

24. Table 3: Negative Factors
Particulars
Animal
testing
alcohol
on
Armaments
eapons)
g
A
alcohol
(producti
retailing)
(w
ambling
tobacco
(production,
retailing)
+3
+3
B
0
0
C
-3
-3
-+3
+3
+3
+3
0
0
0
0
3
-3
-3
-3
II .6 L udy
all group of people which does not guarantee the same
ple was decided on convenience basis.
Only 6 issues have been taken up to test the behavior of a socially responsible investor
ore issues which are not taken up in this study.
d ethical investing is still a unturned stone in
India but people have started considering such concepts while making a investment
portfolio.
I itation of Stim
This research was conducted on a sm
behavior of the population as the sam
whereas there are m
The concept of socially responsible investing an
16

25. Chapter 4:
Data Analysis and
Interpretation

26. Data Analysis and Interpretation
1. AGE
1 stands for 25 or below
2 stands for 25 -35
3 stands for 35-45
4 stands for 45 or above
2. GENDER
for male
A) POSITIVE CRITERIA
Th positive criteria which are as follows-
ion
• Pollution control
ployment practices
ergy
• Healthcare
Recycling
ositive way will
have overall positive score.
1 stands
2 stands for female
ere are 6 variables in
• Environment protect
• Ethical em
• Alternative en
•
An individual whose personal value affects investment decision in a p
17

27. Table 44 (a): Repreesenting Possitive Variabbles
Part1
18

28. Table 44 (b): Repreesenting Possitive Variabbles
Part2
19

29.
Part1
Table 5 (a) : Showwing use of SPSS windoow
20

30. Table 5 (b) : Showwing use off SPSS window
Part2
21

31. Table 5 (c) : Showwing use of SPSS windoo
Part 3
w
22

32. KMO and
Kaiser-Me
Bartlett's T
The Kai
the appro
is approp
value is 0
Bartlett'
are unco
identity m
the other
Bartlett's Test
yer-Olkin Meas
t
Test of Spheric
iser-Meyer-
opriateness o
priate. Value
0.702, so the
's test of sp
orrelated in
matrix; each
r variables (r
sure of Samplin
ity Approx. C
Olkin (KM
of factor ana
es below 0.
e factor analy
phericity is a
the populat
h variable co
r = 0).
ng Adequacy.
Chi-Square
MO) measure
alysis. High
5 imply tha
ysis is appro
a test statisti
tion. In oth
orrelates per
23
e of samplin
values (betw
at factor ana
opriate.
ic used to ex
her words,
fectly with i
Df
Sig.
g adequacy
ween 0.5 and
alysis may n
xamine the
the populati
itself (r = 1)
is an index
d 1.0) indica
not be appro
hypothesis t
ion correlati
) but has no
4
.702
45.294
15
.000
used to exaamine
ate factor anaalysis
opriate. Herre the
that the variiables
is anion matrix
o correlationn with

33. a. Factor - The initial nu the same as the number of variables used in the factor
analysis.
b. Initial Eigenvalues - Eigenvalues are the variances of the factors. Because we conducted our
s variance.
d. % of Variance - This column contains the percent of total variance accounted for by each
factor.
e. Cumulative % - This column contains the cumulative percentage of variance accounted for
by the current and all preceding factors. For example, the third row shows a value of 67.37. This
means that the first three factors together account for 67.37% of the total variance.
f. Extraction Sums of Squared Loadings - The number of rows in this panel of the table
correspond to the number of factors retained. In this example, we requested that two factors be
retained, so there are three rows, one for each retained factor. The values in this panel of the
table are calculated in the same way as the values in the left panel, except that here the values are
based on the common variance. The values in this panel of the table will always be lower than
the values in the left panel of the table, because they are based on the common variance, which is
always smaller than the total variance.
Rotation Sums of Squared Loadings - The values in this panel of the table represent the
r the varimax rotation. Varimax rotation tries to maximize the
racted factors.
mber of factors is
factor analysis on the correlation matrix, the variables are standardized, which means that the
each variable has a variance of 1, and the total variance is equal to the number of variables used
in the analysis, in this case, 6.
Totalc. - This column contains the eigenvalues. The first factor will always acc
ount for the most variance (and hence have the highest eigenvalue), and the next factor will
account for as much of the left over variance as it can, and so on. Hence, each successive factor
will account for less and les
g.
distribution of the variance afte
variance of each of the factors, so the total amount of variance accounted for is redistributed over
the two ext
24

34. Rotated Component Matrix
a
Component
1 2
HealthCare .756 -.220
Recycling .671 .199
AltEnergy .639 .239
EthicalEmploymentPrac .590 .230
Envoprotec .056 .821
Pollutioncontrol .203 .766
Extraction Method: Principal Component Analysis.
Rotation Method: Varimax with Kaiser Normalization.
a. Rotation converged in 3 iterations – This part is generated by the software automatically.
b. Rotated Factor Matrix - This table contains the rotated factor loadings (factor pattern
employment
practices lie in component 1 whereas environmental protection and pollution control lie in
g)
all score is negative represents adverse effects of personal values on
ent decision.
matrix), which represent both how the variables are weighted for each f actor but also the
correlation between the variables and the factor. Because these are correlations, possible values
range from -1 to +1. Hence health care, recycling, Alternative energy and ethical
component 2.
NEGATIVE CRITERIA:
There are 6 negative variables which are as follows:
• Animal testing
• Alcohol
• Alcohol (production and retailin
• Armaments
• Gambling
• Tobacco (production and retailing)
An individual whose over
investm
25

35. Table 6 (a) : Repre
Part1
26
senting Neggative Variaables

36. Table 6 (b) : Repreesenting Negaative Variablee
Part2
s
27

37. Tablee 7 (a): showwing use of SSPSS windoow
Part1
28

38. Table 7 (b) : Repreesenting Neggative Variaa
Part2
bles
29

39.
Part 3
Table 7 (c) : Repre
30
senting Negaative Variablees

40. Kaiser-Me
Bartlett's T
The Kai
the appro
is approp
value is 0
Bartlett'
are unco
identity m
the other
yer-Olkin Meas
Test of Spheric
iser-Meyer-
opriateness o
priate. Value
0.746, so the
's test of sp
orrelated in
matrix; each
r variables (r
sure of Samplin
ity
Olkin (KM
of factor ana
es below 0.
e factor analy
phericity is a
the populat
h variable co
r = 0).
KMO an
ng Adequacy.
MO) measure
alysis. High
5 imply tha
ysis is appro
a test statisti
tion. In oth
orrelates per
31
nd Bartlett's T
e of samplin
values (betw
at factor ana
opriate.
ic used to ex
her words,
fectly with i
Test
Approx
Df
Sig.
g adequacy
ween 0.5 and
alysis may n
xamine the
the populati
itself (r = 1)
. Chi-Square
is an index
d 1.0) indica
not be appro
hypothesis t
ion correlati
) but has no
26
.746
63.969
15
.000
used to exaamine
ate factor anaalysis
opriate. Herre the
that the variiables
is anion matrix
o correlationn with

41. a. Factor - The initial number of factors is the same as the nu used in th
analysis.
b. Initial Eigenvalues - Eigenvalues are the variances of the factors. Because we conducted our
. % of Variance - This column contains the percent of total variance accounted for by each
factor.
e. Cumulative % - This column contains the cumulative percentage of variance accounted for
by the current and all preceding factors. For example, the third row shows a value of 86.909.
This means that the first three factors together account for 86.909% of the total variance.
f. Extraction Sums of Squared Loadings - The number of rows in this panel of the table
correspond to the number of factors retained. In this example, we requested that two factors be
retained, so there are three rows, one for each retained factor. The values in this panel of the
table are calculated in the same way as the values in the left panel, except that here the values are
based on the common variance. The values in this panel of the table will always be lower than
the values in the left panel of the table, because they are based on the common variance, which is
always smaller than the total variance.
. Rotation Sums of Squared Loadings - The values in this panel of the table represent the
istribution of the variance after the varimax rotation. Varimax rotation tries to maximize the
variance of each of the factors, so the total amount of variance accounted for is redistributed over
mber of variables e factor
factor analysis on the correlation matrix, the variables are standardized, which means that the
each variable has a variance of 1, and the total variance is equal to the number of variables used
in the analysis, in this case, 6.
Totalc. - This column contains the eigenvalues. The first factor will always account for the
most variance (and hence have the highest eigenvalue), and the next factor will account for as
much of the left over variance as it can, and so on. Hence, each successive factor will account
for less and less variance.
d
g
d
the two extracted factors.
32

42. Rotated Component Matrix
a
Component
1 2
2alocholproductionandretail .935 .198
Alcohol .885 .223
Armaments .736 .208
Animaltesting .037 .922
Gambling .414 .777
Tobacco .525 .653
Extraction Method: Principal Component Analysis.
Rotation Method: Varimax with Kaiser Normalization.
b. Rotated Factor Matrix - This table contains the rotated factor loadings (factor pattern matrix),
which represent both how the variables are weighted for each f actor but also the correlation
between the variables and the factor. Because these are correlations, possible values range from -
1 to +1. Hence alchohol production and retail and armaments will lie in component 1 whereas
animal testing, gambling and tobacco lie in component 2.
Table 8: showing results of question 2
OPTION % OF RESPONDENTS Number of respondent
A 26.76 19
B 19.72 14
C 45.07 32
D 8.45 6
Total 100 71
33

43. Figure 2(a): showing results of question 2
ption A- represents investment in fund A
ption B- represents investment in fund B
ption C- represents investment in fund A if ethical approach was acceptable.
Option D- represents investment in fund B if the performance was acceptable.
Figure 2(b): showing results of question 2
19
14
6
NUMBER OF RESPONDENTS
A
B
C
32 D
O
O
O
26.76
19.72
45.07
8.45
ESPONDENTS% OF R
A
B
C
D
34

44. TTable 9: showwing resultss of investmment in diffeerent case
VARIABLE
tobacco
alcohol
armame
animal te
human r
environm
Table 9 s
Under ca
under cas
under cas
ES
nts
esting
right exploitat
mental damag
Fi
shows people
ase 1 R(-) = R
se 2 R(-) > R
se 3 R(-)>R(
0
10
20
30
40
50
60
tion
ge
Avera
igure 3: sho
e who are re
R(+)
R(+) by 2 %
(+) by 10 %
case1 c
12
15
12
10
8
10
ge
owing result
eady to inves
35
ase2 cas
16
18
15
12
18
15
ts of investm
st in the follo
se3 % cas
55 16.90
50 21.12
45 16.90
55 14.08
50 11.26
40 14.08
15.7
ment in diffe
owing variab
se1 % case
0141 22.535
2676 25.352
0141 21.126
8451 16.901
6761 25.352
8451 21.126
7277 22.065
erent case
bles under di
ca
ca
ca
e 2 % case 3
521 77.464779
211 70.422554
676 63.380228
141 77.464779
211 70.422554
676 56.338003
573 69.248883
ase1
ase2
ase3
ifferent casees.

45. Chapter 5:
Conclusion and Suggestion

46. CONCLUSION
S ponsible investing is bec ain . T es o to
e the fiduciary duties of financial adviso to thei i e fit
m goal of investors is being challenged. For some r ay
be just one goal to seek in combination with o goals d O lly
captur view in reviewi vestm
SRI financial advisors and their clients deserve to experience th
expertise, as captured by one of the respondents to the IMCA Monitor Editorial Board survey on
thical practices: Trust is built initially by taking time to understand what is important to clients
and by showing them ealing the strategies
used to help them accomplish their goals, we build the trust further. Ultimately, the trust is
solidified by giving the client realistic expectations and executing the processes as described.
The title of this research –whether personal values affects investment decision? Is a critical
question for all financial advisors and the clients whom they serve?
The evidence presented in this study would conclude that your fiduciary duty is not risk. This
article seeks to respond to the challenge set forth by Young as illustrated below: The challenge
for business ethics is not so much enunciating the unyielding call of moral perfection but rather
providing practical wisdom relevant to the needs of business decision-makers. Financial advisors
who specialize in socially responsible investing do not have to provide less service or act in a
fashion that demonstrates less integrity. However, such advisers should inform prospective
clients of this specialty and spell out any inherent risks as matter of fair disclosure and fully
form the client. Socially responsible investing, investment management consulting, prudence,
it
impossible.
• 45% of the respondent opted for a fund which has a better financial performance as long
acceptable where as approximately 27% of the respondent
ly has better financial performance. This indicates that people
are concerned about return and at the same time their personal values affect their
investment decision.
ocially res slowly ome m stream his mak it even m re critical
stablish rs r cl ents. On a global lev l, the pro
aximization clients, p ofit maximization m
ther an interests. ne commentator fu
ed the spirit of this ng his career as an in ent professional:
e highest quality of service and
e
the processes behind portfolio management. By rev
in
and fiduciary responsibility can interact well together. The task is not easy. But neither is
as its ethical approach was
opted for a fund which on
36

47. • A potential investor may diffe ssues about which they feel strongly
Negligible opposition
en the return was more in
r as to the specific i
concerned. An investor may be in strongly opposition to alcohol industry but may or may
not be concerned about industries involving animal testing.
• A investor may differ in intensity of their feeling regarding a single social issue:-
Strongly opposition
Moderately opposition
• Socially responsible investor differs in their degree of financial commitment.
Entire portfolio to socially ethical investment which indicates that his
personal values at too high while making an investment decision.
A part of portfolio to socially ethical investments which indicates that the
investor is using a balanced approach while making an investment decision.
• Approximately 15 % of the respondents proven to be unethical as which they choose
negative industry even when the returns were same as of ethical industry.
• 22 % of the respondents has choose negative industry wh
negative industry as comparative to positive industry by 2 % which reflects (100- 22)%=
78% of the respondents made an investment decision which was positively affected by
their personal values .
• But approximately 70% of the respondents choose the negative industry when the return
was 10 % more that of positive industry.
37

48. REFERENCES

49. 38
al and SR­investor.
gevlin. ng. journal of financial planning , 37(8)‐56.
GOYEN, hically acceptable nature conservation company. business
.
LEWIS,
LEWIS, M. a. ness
ethics,24(3
MACKENZIE, ,
onsible investing. journal of business ethics, vol.43 , 189.
parkes. (1998). some thoughts on ethics of investment. ep‐worth review , 13‐27.
M. (2013). relationship of ethical climate with intention and SRI behavior. journal of business
nd law , 250‐265.
tell, h. a. (1986). a general theory of marketing and ethics. journal of marketing , 6(1):5.
ebley, L. a. (1994). relationship between values,belifs and investment decision. human relations ,
86(2).
REFERENCES
GARDNER, M. A. (2004). differ between convention
business behavior and ethics , 55­67.
(2007). the coming age of SR investi
B. A. (1998). why investors invest in et
KRAUTER, G. A. (2004). environmental awareness and education. business and ethics .
M. A. (1999). ethical investing. business ethics quaterly 9(3) , 439‐452.
(2000(b)). support for investor activism among ethical investors. journal of busi
) , 215‐222.
L. A. (2000(a)). moral, motives,and money, "ethical investing". human relations 53 (2)
179‐191.
Nilsson. (2008). perception og investor regarding SRI. financial planning , 245‐255.
RILEY, W. R. (2010). role of personal value in investment decision. journal of business ethics , 237‐253.
rosen. (1991). demographic profile of SR‐Investors. business and ethics , 245.
SCHEUTH, S. (2003). socially resp
social invesment forum. (2008). Retrieved from http://www.social
invest.org/news/releases/pressrelease. cfm?id= 108
S
TALHAI,
a
vi
W

50. ANNEXURE

51. Annexure I
Factor Analysis in SPSS
Procedure using SPSS for windows for Factor analysis:
1. Select ANALYZE from the SPSS menu bar.
2. Click DIMENSION REDUCTION and the FACTOR.
3. Move all the factors into the VARIABLES box.
4. Click on DESCRIPTIVES. In the pop-up window, in the STATISTICS box check INITIAL
SOLUTION. In the CORRELATION MATRIX box check KMO AND BARTLETT'S TEST OF
SPHERICITY and also check REPRODUCED. Then Click CONTINUE.
5. Click on EXTRACTION. In the pop-up window, for METHOD select PRINCIPAL
COMPONENTS (default). In the ANALYZE box, check CORRELATION MATRIX.
In the EXTRACT box, select BASED ON EIGENVALUE and enter 1 for EIGENVALUES
GREATER THAN box. In the DISPLAY box check UNROTATED FACTOR SOLUTION.
Then Click CONTINUE.
6. Click on ROTATION. In the METHOD box check VARIMAX. In the DISPLAY box check
ROTATED SOLUTION. Click CONTINUE.
7. Click on SCORES. In the pop-up window, check DISPLAY FACTOR SCORE
COEFFICIENT MATRIX. Click CONTINUE.
8. Click OK.
(Questionnaire attached)
i

52. Annexure II
Name : _________________________________
Age : 25 or Below 25‐35 35‐45 45 or Above
Gender: Male Female
Highest Qualification: Undergraduate Graduate Post‐Graduate Any other…….
Socially Responsible Investing (SRI) and Ethical Investing
Ethical Investment starts with your ideas and principles – what you believe to be important Views
varies from person to person regarding the “ethical investment decision” and “SRI” is an investment
process that considers the social and environmental consequences of investment, both positive and
negative, within the context of rigorous financial analysis. It is a process of identifying and investing in
companies that meet the certain standard of “Corporate Social Responsibility”
Positive Criteria :‐ ‘A’ stands for ‘STRONGLY SUPPORTING’ the issue mentioned
‘B’ stands for support ‘IF POSSIBLE’ , I will support if all other conditions are in favour
‘C’ stands for not an concerned area , which depicts ‘NO INTEREST’.
Particulars
Environmental
protection
ollution control
employment
s
e
nergy
ecycling
P
thical E
practice
Alternativ
E
Health care
R
A
B
C
ii

53.
NEGATIVE CRITERIA—Pleasementioned your view according to the following
mentioned criteria regarding your investment decision.
’ stands for ‘STRICT AVOIDENCE’ the issue mentioned
’ stands for support ‘BALANCED APPROACH’
‘A
‘B
‘C’ stands for ‘OF NO INTEREST’
Particulars A
Animal
testing
(production
)
rmaments
s)
gambling
n,
tailing)
alcohol
alcohol
retailing
A
(weapon
tobacco
(productio
re
B
C
iii

54.
Ethical compromise
1.To what degree are you prepared to compromise your ethical criteria to achieve
financial goals?
(a) My financial goals come first – ethical concerns come second
Strongly agree Agree Not sure Disagree Strongly disagree
(b) I am prepared to take more risk to follow my ethical objectives
Strongly agree Agree Not sure Disagree Strongly disagree
(c) As long as my basic financial needs are met, I am not too concerned about
financial performance-
trongly agree Agree Not sure Disagree Strongly disagree
) I am prepared to accept a lower financial return if it means that I make more of
social difference
gree Not sure Disagree Strongly disagree
e
with a relatively poor ethical profile, which could you choose?
S
(d
Strongly agree A
2. If you had a choice of two funds, fund A with a much better financial performanc
than fund B, but
Fund A
Fund B
Fund A as long as the ethical approach was acceptable
Fund B if the performance was acceptable.
iv

55. In this surveywe have taken 6 types of Industries (See the list in Table 2), that a
socially unethical and compared the Investors investment decision under th
re
e three
conditions. Return on investment on Unethical industries are denoted as R(-) and
eturn tment on socially ethical is denoted as R(+).
ase 1
ase 2
f Rs1 of Rs 2,000, in five year the gain
amount will be Rs 1,5183.2
ase 3 :- R(-) is greater by 10%. Therefore the net effect in one year on investment
f Rs1,00,000 according to the “Table 1” is gain of Rs10,000 in five year the gain
amount will be Rs87,781.
ollowing table shows the total return on the investment of ₹ 1,00,000.
r on inves
C :- R(-) = R(+)
C :- R(-) is greater by 2%. Therefore the net effect in one year on investment
,00,000according to the “Table 1” is gaino
in
C
o
in
F
1
ear/Rate of Return 10 % 12% 20%
Table
Y
One Year 1,10,000 1,12,000 1,20,000
Five Year 1,61,051 1,76,234.2 2,48,832
Table 2
Examples Industry
Tobacco I.T.C limited
Alcohol King fisher
Armaments Bharat electronics ltd. {BEL}
Animal Testing Jhonson&jhonson, unilever etc.
Industries involved in
Human ight
Exploitation
Tata tea ltd.
Environmental
damage
Lavasa
v

56. Action
Particu Case 1
I Will Invest
I Will not invest
I Will Invest
I Will not invest
I Will Invest
I Will not invest
I Will Invest
I Will not invest
I Will Invest
I Will not invest
I Will Invest
I Will not invest
Case 2
I Will Invest
I Will not invest
I Will Invest
I Will not invest
I Will Invest
I Will not invest
I Will Invest
I Will not invest
I Will Invest
I Will not invest
I Will Invest
I Will not invest
Case 3 lars
1.Tobacco co.
2. Alcohol
I Will Invest
I Will not invest
I Will Invest
I Will not invest
I Will Invest
I Will not invest
I Will Invest
I Will not invest
I Will Invest
I Will not invest
I Will Invest
I Will not invest
vi
co.
[Retail + Produc
3. Armaments
4. Animal Testing
[medical product and
cosmetic pr
5.Industries involved in
Human Right
Exploitation
6 . Environmenta
damage [mining]
tion]
oduct]
l