Financial Crisis and Corporate Social Responsible Mutual Fund Flows

Sitikantha Parida and Zhihong Wang
Additional contact information
Sitikantha Parida: Graduate School of Management, Clark University, Worcester, MA 01610, USA
Zhihong Wang: Graduate School of Management, Clark University, Worcester, MA 01610, USA

IJFS, 2018, vol. 6, issue 1, 1-19

Abstract: In this paper, we investigate investment flows into mutual funds that hold more high corporate social responsible stocks (top CSR funds) vs. mutual funds that hold more low corporate social responsible stocks (bottom CSR funds). Using a large sample of equity mutual funds spanning 2003–2012, we find that top CSR funds on average receive about 5% less investment per annum compared to the other funds; whereas bottom CSR funds receive about 5.6% more investments. These relative negative and positive flows into the top and bottom CSR funds respectively were larger during the pre-financial crisis period (2003–2007). This trend, however, reversed during the financial crisis (2008–2009). Top CSR funds attracted about 8.7% more investments during the financial crisis compared to the pre-crisis period; whereas bottom CSR funds received about 9.8% less investment. This higher investment into the top CSR funds during the crisis seems to have disappeared during the post-crisis period (2009–2012). Additional analysis shows that the corporate social ratings of top CSR funds improved through the crisis, whereas it deteriorated for the bottom CSR funds. Our findings are consistent with the “flight to quality” phenomenon observed in financial markets during market crises, indicating that investors perceive top CSR fund investments as relatively safe or of higher quality and hence, invest more in them during financial crises.

Keywords: corporate social responsibility; mutual fund flows; financial crisis; flight to quality (search for similar items in EconPapers)
JEL-codes: F2 F3 F41 F42 G1 G2 G3 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
https://www.mdpi.com/2227-7072/6/1/8/pdf (application/pdf)
https://www.mdpi.com/2227-7072/6/1/8/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jijfss:v:6:y:2018:i:1:p:8-:d:125640

Access Statistics for this article

IJFS is currently edited by Ms. Hannah Lu

More articles in IJFS from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().