Work

Why Do Investors Hold Socially Responsible Mutual Funds?

Year: 2017

Type: article

Abstract: ABSTRACT To understand why investors hold socially responsible mutual funds, we link administrative data to survey responses and behavior in incentivized experiments. We find that both social preferences and social signaling explain socially responsible investment (SRI) decisions. Financial motives play less of a role. Socially responsible investors in our sample expect to earn lower returns on SRI funds than on conventional funds and pay higher management fees. This suggests that investors are willing to forgo financial performance in order to invest in accordance with their social preferences.

Source: The Journal of Finance

DOI: 10.1111/jofi.12547

Authors: ARNO RIEDL, PAUL SMEETS

Institutions: Heidelberg University, Maastricht University, University of California San Diego, Toulouse School of Economics

Language: English

Topic: Financial Markets and Investment Strategies

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: bronze

Funders: Stiftelsen för Miljöstrategisk Forskning, Nederlandse Organisatie voor Wetenschappelijk Onderzoek, University of California, San Diego

Awards: G5642024378, G7010378412, What motivates investors to hold responsible investments?