Allen Ferrell, the Harvey Greenfield Professor of Securities Law at Harvard Law School, has been awarded the 2014 Moskowitz Prize. The prestigious annual award from the University of California, Berkeley’s Haas School of Business, recognizes outstanding quantitative research in socially responsible investing.
Ferrell received the prize, along with Hao Liang and Luc Renneboog, both from Tilburg University in the Netherlands, for their jointly authored paper “Socially Responsible Firms.” It presents the results of their study showing that good corporate governance correlates with higher Corporate Social Responsibility (SCR) initiatives. And in turn, these increased CSR practices contribute to shareholder wealth.
The costs and benefits of CSR to shareholders continue to be debated. The paper’s findings – that higher CSR performance is closely related to how much firms retain in cash holdings and higher pay-for-performance returns – support the view that CSR increases shareholder value.
“We’ve known for some time that corporate investment in social responsibility can pay off,” says Lloyd Kurtz, faculty co-chair of the Moskowitz Prize selection committee, “But there have also been legitimate concerns that shareholder money might be diverted to vanity projects or other inappropriate uses in the name of CSR. This study really moves us forward in understanding how companies are investing in CSR, and how that relates to shareholder value creation.”
In addition to teaching securities and law and economics courses at Harvard Law School, Ferrell is also a faculty associate at the Kennedy School of Government, chairman of the Harvard Advisory Committee on Shareholder Responsibility, and a research associate at the European Corporate Governance Institute.
The Moskowitz Prize is named for Milton Moskowitz, one of the first investigators to publish comparisons of the financial performance of screened and unscreened portfolios. Studies are reviewed by an expert panel of judges from both academic and investment circles, and judged on: their practical significance to practitioners of socially responsible investing; appropriateness and rigor of quantitative methods; and novelty of results. This year’s prize was presented at the 25th annual Socially Responsible Investing (SRI) Conference in Colorado Springs, Colo. on November 10.