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For the most part, politicians do put their money where their mouths are. A recent study of U.S senators and representatives finds that the more liberal a politician's voting record is, the more likely the politician is to invest in socially responsible stocks.
"Socially responsible investments refer to investments in companies that reflect traditionally liberal values, such as environmental sustainability, good labor relations and diversity," says Jesse Ellis, co-author of a paper on the research.
Extent - Ideology - Investment - Decision-making - Officials
"We wanted to know the extent to which political ideology informed investment decision-making, and publicly elected officials serve as a good case study," says Ellis, who is an associate professor of finance in North Carolina State University's Poole College of Management. The research was done with collaborators at Elon University and Heriot-Watt University.
For the study, researchers looked at data on all of the members who served in the U.S. House of Representatives or the U.S. Senate between 2004 and 2012.
Ideology - Researchers - Database - Score - Politicians
To determine political ideology, the researchers drew on the DW-NOMINATE database, which attributes an ideological score to politicians based on their voting records. To determine which companies each politician invested in, researchers assessed public disclosure statements of each lawmaker's financial holdings. The researchers then looked at each company's score in the MSCI KLD database, which assigns companies a social responsibility...
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