Socially responsible investors and the disposition effect

In this paper we analyze the possible interaction between socially responsible investment and the disposition effect-the tendency to hold losing stocks too long and sell winning stocks too early. We analyze trading and portfolio data from a large retail bank and find that socially responsible investors display a greater disposition effect than conventional investors. Only when investors invest a substantial proportion of their portfolio in socially responsible stocks do we find evidence for a differential disposition effect, whereas we do not find evidence for a relationship between the percentage invested in socially responsible stocks and the disposition effect. (C) 2017 Published by Elsevier B.V.