‘Sin’ stocks lure investors with high returns

“Sin” companies such as tobacco, alcohol and gambling are ignored by institutions and analysts – until the profits get too high to ignore.

A multi-institute research paper, using stock market data, Gallup polls and government surveys, found many institutions invest according to their “moral identity” until the projected returns cross a threshold. Similarly, analysts avoid these industries until the stock price rises above a certain point.

Researchers say this sheds light on the relationship of social norms and financial incentives.

Read more at University of Toronto, McMaster University, Singapore Management University