A Comparative Analysis Of Socially Responsible Investing For Borsa Istanbul Stock Market

Year 2018, Issue: 110, 199 - 216, 10.11.2018

Nalan Ece

https://doi.org/10.33203/mfy.431062

Abstract

The purpose of
this study is to examine the stock market performance and accounting
performance of Participation 30 Index (KATLM), Corporate Governance Index
(XKURY) and Sustainability Index (XUSRD), all of which are calculated by Borsa Istanbul
(BIST) stock market. The companies in these indexes are approved as companies
making socially-responsible investments.  Design/methodology/approach – The
risk-adjusted performance measures, Sharpe Ratio, Treynor Measure, Jensen
Measure, Information Ratio, M² Performance Measure and  T² Performance Measure were used
in this article to calculate the stock market performance. The return on assets
(ROA) and return on equity (ROE) were used as accounting based performance
measures. The results show that there is a positive relation between social
responsibility and financial performance for companies in BIST. Research limitations/implications - BIST Sustainability Index has
started to be computed as of November 2014, and it is one of the limitations of
this study. Practical implications – First, the shortage of investment
alternatives of companies covered within the context ethical finance is not a
disadvantage for them. Second, Islamic Finance, which can be investigated
within the context of ethical finance, has become popular in recent years in
Turkey. KATLM Index, which is consisted of stocks of the companies operating
compatible with the principles of participation banking, is an alternative for risk averse investors. Originality/value - Turkish stock market is an
emerging financial market. The findings of this study has implications for
local and international investors for designing trading strategies, drawing
investment decisions and risk management.

Keywords

Corporate Social Responsibility, Islamic Finance

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