Abstract
This thesis investigates the effect of a firm’s status as a company which exploits animals on its financial performance, ownership structure and analyst coverage. The research is conducted on a sample of companies listed on the three major North American stock exchanges, namely NYSE, NASDAQ, and AMEX, from 2018 to 2021. The analysis is divided into three parts. In the first part, we aim to analyze the effect of animal exploitation on financial performance. In this context, we examine whether a long-short trading strategy, which invests in companies that exploit animals and shorts those that do not, is profitable. Moreover, we analyze whether companies which exploit animals have higher individual excess returns, even when accounting for several firm characteristics that might explain returns. In the second part of our analysis, we investigate whether companies that exploit animals have a lower proportion of retail investors, due to the investors’ moral concerns about the companies’ business models. Lastly, we analyze whether the Exploit status of a firm has an impact on its monthly number of articles published by non-professional analysts on Seeking Alpha. We perform all analyses both on the overall sample as well as on an industry level, as animal exploitation is more prevalent in some industries, such as food and fashion, than in others. The empirical results show that companies which refrain from exploiting animals significantly outperform their sin counterparts in terms of financial performance. However, the opposite holds when studying certain industries where animal exploitation is the norm, namely the fashion, drugs, and cosmetics industries. Moreover, our results indicate that the proportion of retail investors is significantly lower for firms that exploit animals. Lastly, we find that non-professional analysts cover companies that exploit animals more frequently than those that do not.
Educations | MSc in Finance and Investments, (Graduate Programme) Final Thesis |
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Language | English |
Publication date | 2022 |
Number of pages | 148 |
Supervisors | Lena Jaroszek |