The impact of the COVID-19 pandemic on motivating factors affecting individual investors’ socially responsible investment decision: a comparative analysis of the USA, Germany and Japan

Abstract

Purpose

Individual investors are experiencing serious sentiment shifts that influence their financial activities due to the COVID-19 pandemic while socially responsible investment (SRI) has garnered attention worldwide. This study aims to explore how individual investors’ sentiments and investment choices altered in reaction to the COVID-19 pandemic.

Design/methodology/approach

We surveyed 1,219 individual investors in Japan, the USA and Germany using an online questionnaire and performed a cross-sectional analysis using logit and ordered logit regressions.

Findings

This study found that individual investor sentiment affects SRI after COVID-19, but not necessarily in the same manner. Return-focused aspects negatively affect their SRI, while relationship-oriented social issues positively affect it. In addition, the relationship differs by nation. Japanese investors anticipate shorter term SRI returns than the US and German investors. Only Japanese investors’ SRI decisions were impacted by the relationship-oriented social factors including the environment, diversity and employee rights and welfare.

Research limitations/implications

This study emphasizes the need for precise motivation characterization when evaluating the same issue. The author also identified the variance and characteristics among countries, which differ from previous research.

Practical implications

An academically credible image of the relationship will enable business managers to find appealing strategies. This study also suggests country-specific investor relations strategies.

Originality/value

This study differentiates return- and relationship-oriented social motivations for SRI into 14 components, thus clarifying the relationship mechanism between the COVID-19 pandemic and individual investors’ SRI behavior. Moreover, no study has compared individual investor sentiment and investment behavior affected by the pandemic in the three countries.

Citation

Murashima, M. (2023), "The impact of the COVID-19 pandemic on motivating factors affecting individual investors’ socially responsible investment decision: a comparative analysis of the USA, Germany and Japan", Corporate Governance, Vol. 23 No. 5, pp. 1063-1084. https://doi.org/10.1108/CG-08-2022-0342