Socially responsible investing: Is it for real or just for show?

Hongfeng Peng, Zhenqi Zhang, John W. Goodell and Mingsheng Li

International Review of Financial Analysis, 2023, vol. 86, issue C

Abstract: Many mutual funds declare themselves as socially responsible investment (SRI) funds. However, it is unclear whether this rhetoric is simply window-dressing to attract capital inflows or reflects genuine concern. We show that companies with better environmental, social, and governance (ESG) performance are more attractive to SRI mutual funds. More importantly, SRI mutual funds positively affect their investee firms' ESG performance after controlling for firm characteristics, possible endogeneity issues, and omitted variables. Furthermore, ownership structure, board members' international experience, and social media attention are important channels through which SRI mutual funds influence their investee firms' ESG performance.

Keywords: Socially responsible investment (SRI); Environmental, social, and governance (ESG); Corporate social responsibility (CSR); Mutual funds; Chinese markets (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:86:y:2023:i:c:s1057521923000698

DOI: 10.1016/j.irfa.2023.102553

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