Exploring Stock Screening: Criteria and Procedure for Investors

This essay provides a comprehensive definition of stock screening, which involves identifying stocks that meet specific investment criteria. It highlights key criteria such as company control, environmental concerns, growth potential, social impact, and political influence, emphasizing their importance in making informed investment decisions. The essay also outlines a general procedure for stock screening, advising investors to align their stock selections with their financial needs, risk tolerance, and social objectives. Ultimately, the goal of stock screening is to identify stocks that not only offer financial returns but also align with an investor's ethical and social values.

Running head: DEFINITION OF STOCK SCREENING 1
Definition of Stock Screening
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DEFINITION OF STOCK SCREENING 2
Stock Screening
Stock screening is usually the process of establishing the type of stocks which could
meet investors’ selection criteria (Sevastjanov & Dymova, 2009). In other words, stock
screening it the process of identifying or looking for stocks which meet certain criteria
instead of just investing haphazardly in whatever stock an investor consider good (Tam,
Kiang & Chi, 1991).
Criteria for Stock Screening
Making decision on the criteria in stock screening is greatly influenced by the
investment style like high yield, value, price or growth momentum (Tam, Kiang & Chi,
1991). While developing list of active stock screening criteria, there are a number of criteria
which can be pointed out; these include, company control, environmental concerns, growth
potential, social impact as well as political influence (Chupka, Seifert & Vitori, 2001). In
dealing with company control, understanding the majority shareholders is crucial. Investing
in an organization where top CEO has relatively large share control of the organization limits
an individual chance of influence via any means. In case, insiders or top management refuse
maximizing shareholder value, the skilled activists might be in a position to eliminate them
via alternative fight or absolute acquisition of an organization through unsought tender
proposal (Sevastjanov & Dymova, 2009).
Further, an organization’s social impact is said to play a crucial function in
marketability to general public. For organizations involved in some unethical processes or the
one in middle of questionable issues, particularly edge their investment favour. Currently,
most investors shy away from any involvement of social wrongdoing (Adam & Bakar, 2014).
How an organization treats its employees and shareholders is a crucial social impact criteria
helpful in stock screening. Other activists might use political influence in selecting a certain
stock. A democratic investor might select investing in an organization which is extremely

DEFINITION OF STOCK SCREENING 3
Republican. Other activist use growth potential as an active stock screening criterion.
Investors with high expectation tend to invest in an organization which is having high growth
potential (Tam, Kiang & Chi, 1991). Environmental concerns such as compliance with
specific government regulations or solar energy are very crucial criteria in stock screening.
Investors consider investing in organizations that are in full compliance with government
regulations and that are using solar energy since this could result in high yield.
Stock Screening Procedure
To be socially responsible, how does one pick the right stocks? Here are some of the
general procedures to assist in stock screening. First as with other type of investment, one
requires to select possible portfolio or stocks based on their financial needs and how much
risk one is ready to assume (Sevastjanov & Dymova, 2009). Further, one should determine
the most significant social concerns and make decision which of such investments meets his
or her social objectives.
Conclusion
In conclusion, stock screening entails establishing the type of stocks which could
meet certain criteria instead of just investing haphazardly in whatever stock an investor
consider good. To attain this, following active criteria should be considered include company
control, environmental concerns, growth potential, social impact as well as political
influence.

DEFINITION OF STOCK SCREENING 4
References
Adam, N. L., & Bakar, N. A. (2014). Shariah screening process in Malaysia. Procedia-Social
and Behavioral Sciences, 121, 113-123.
Chupka, D. E., Seifert, P., & Vitori, C. M. (2001). U.S. Patent No. 6,193,073. Washington,
DC: U.S. Patent and Trademark Office.
Sevastjanov, P., & Dymova, L. (2009). Stock screening with use of multiple criteria decision
making and optimization. Omega, 37(3), 659-671.
Tam, K. Y., Kiang, M. Y., & Chi, R. T. (1991). Inducing stock screening rules for portfolio
construction. Journal of the Operational Research Society, 42(9), 747-757.