Featured Research

from universities, journals, and other organizations

Money talks when it comes to acceptability of 'sin' companies, study reveals

Date:
July 30, 2014
Source:
University of Toronto, Rotman School of Management
Summary:
Companies who make their money in the 'sin' industries such as the tobacco, alcohol and gaming industries typically receive less attention from institutional investors and financial analysts. But new research shows social norms and attitudes towards these types of businesses are subject to compromise when their share price looks to be on the rise.

Companies who make their money in the "sin" industries such as the tobacco, alcohol and gaming industries typically receive less attention from institutional investors and financial analysts.

Related Articles


But new research shows social norms and attitudes towards these types of businesses are subject to compromise when their share price looks to be on the rise. A paper from the University of Toronto's Rotman School of Management found that institutional shareholdings and analysts' coverage of sin firms were low when firm performance was low but went up with rising performance expectations.

That suggests that market participants may ignore social norms and standards with the right financial reward.

"This is a way to test the trade-off between people's non-financial and financial incentives. The boundary of people's social norms is not a constant," said researcher Hai Lu, an associate professor of accounting at the Rotman School. Prof. Lu co-wrote the paper with two former Rotman PhD students, McMaster University's Kevin Veenstra and Yanju Liu, now with Singapore Management University.

The paper sheds light on why there can be a disconnect between the investment behaviour of Wall St. and the ethical expectations of ordinary people. It also suggests a worrisome implication that compromising one's ethical values in the face of high financial rewards can become a social norm in itself.

On the brighter side, the paper also finds that strong social norms still have an influence over people's behaviour. If social norms are strong enough and the price of ignoring them is high, this may act as a disincentive to disregard them in favour of other benefits.

This is the first study to examine whether the social acceptability of sin stocks can vary with financial performance. The researchers compared consumption and attitudinal data with information on sin firm stocks, analysts' coverage and levels of institutional investment.


Story Source:

The above story is based on materials provided by University of Toronto, Rotman School of Management. Note: Materials may be edited for content and length.


Journal Reference:

  1. Liu, Yanju and Lu, Hai and Veenstra, Kevin J. Is Sin Always a Sin? The Interaction Effect of Social Norms and Financial Incentives on Market Participants’ Behavior. Accounting, Organizations and Society, March 31, 2014 [link]

Cite This Page:

University of Toronto, Rotman School of Management. "Money talks when it comes to acceptability of 'sin' companies, study reveals." ScienceDaily. ScienceDaily, 30 July 2014. <www.sciencedaily.com/releases/2014/07/140730120250.htm>.
University of Toronto, Rotman School of Management. (2014, July 30). Money talks when it comes to acceptability of 'sin' companies, study reveals. ScienceDaily. Retrieved November 26, 2014 from www.sciencedaily.com/releases/2014/07/140730120250.htm
University of Toronto, Rotman School of Management. "Money talks when it comes to acceptability of 'sin' companies, study reveals." ScienceDaily. www.sciencedaily.com/releases/2014/07/140730120250.htm (accessed November 26, 2014).

Share This


More From ScienceDaily



More Science & Society News

Wednesday, November 26, 2014

Featured Research

from universities, journals, and other organizations


Featured Videos

from AP, Reuters, AFP, and other news services

Who Will Failed Nuclear Talks Hurt Most?

Who Will Failed Nuclear Talks Hurt Most?

Reuters - Business Video Online (Nov. 25, 2014) With no immediate prospect of sanctions relief for Iran, and no solid progress in negotiations with the West over the country's nuclear programme, Ciara Lee asks why talks have still not produced results and what a resolution would mean for both parties. Video provided by Reuters
Powered by NewsLook.com
FCC Forces T-Mobile To Alert Customers Of Data Throttling

FCC Forces T-Mobile To Alert Customers Of Data Throttling

Newsy (Nov. 25, 2014) T-Mobile and the FCC have reached an agreement requiring the company to alert customers when it throttles their data speeds. Video provided by Newsy
Powered by NewsLook.com
From Popcorn To Vending Snacks: FDA Ups Calorie Count Rules

From Popcorn To Vending Snacks: FDA Ups Calorie Count Rules

Newsy (Nov. 25, 2014) The US FDA is announcing new calorie rules on Tuesday that will require everywhere from theaters to vending machines to include calorie counts. Video provided by Newsy
Powered by NewsLook.com
Symantec Uncovers Sophisticated Spying Malware Regin

Symantec Uncovers Sophisticated Spying Malware Regin

Newsy (Nov. 24, 2014) A Symantec white paper reveals details about Regin, a spying malware of unusual complexity which is believed to be state-sponsored. Video provided by Newsy
Powered by NewsLook.com

Search ScienceDaily

Number of stories in archives: 140,361

Find with keyword(s):
Enter a keyword or phrase to search ScienceDaily for related topics and research stories.

Save/Print:
Share:

Breaking News:

Strange & Offbeat Stories


Science & Society

Business & Industry

Education & Learning

In Other News

... from NewsDaily.com

Science News

Health News

Environment News

Technology News



Save/Print:
Share:

Free Subscriptions


Get the latest science news with ScienceDaily's free email newsletters, updated daily and weekly. Or view hourly updated newsfeeds in your RSS reader:

Get Social & Mobile


Keep up to date with the latest news from ScienceDaily via social networks and mobile apps:

Have Feedback?


Tell us what you think of ScienceDaily -- we welcome both positive and negative comments. Have any problems using the site? Questions?
Mobile: iPhone Android Web
Follow: Facebook Twitter Google+
Subscribe: RSS Feeds Email Newsletters
Latest Headlines Health & Medicine Mind & Brain Space & Time Matter & Energy Computers & Math Plants & Animals Earth & Climate Fossils & Ruins