Trading for good: How active mutual funds influence corporate social responsibility through stock trading

Jie Jiao, Lin Tong and An Yan

Journal of Banking & Finance, 2025, vol. 178, issue C

Abstract: We hypothesize that active mutual funds can promote corporate social responsibility (CSR) in their portfolio firms through stock trading activities. Leveraging mutual fund family mergers to identify causal effects, we find that a firm’s CSR commitment increases when its mutual funds exhibit stronger CSR preferences through trading. This effect is stronger when mutual fund investors are more active or when the firm’s stock exhibits higher liquidity. Additionally, our results suggest that the trading channel complements non-trading mechanisms through which active mutual funds influence firm CSR.

Keywords: Corporate social responsibility; Mutual funds; Trading (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:178:y:2025:i:c:s0378426625001438

DOI: 10.1016/j.jbankfin.2025.107523

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