Does the self-holding behavior of fund managers foster fund sustainable investment?

Hu Wang, Yuanqiang Lian and Hong Shen

Economic Modelling, 2025, vol. 151, issue C

Abstract: Whether fund managers investing in their own funds, a practice often viewed as a way to align interests and mitigate agency conflicts, actually encourages sustainable investment remains an important but underexplored question. Leveraging data on fund managers' personal fund holdings, portfolio compositions, and environmental, sustainability, and governance (ESG) ratings, we examine how self-holding behavior relates to funds' sustainable investment practices. Our results show a positive association between fund managers’ self-investment and fund sustainable investment. Fund managers who invest in the funds they manage are more likely to adopt sustainable investment strategies aimed at boosting returns and reducing portfolio risk. Moreover, firms held by these funds experience lower stock price crash risk and demonstrate a stronger tendency to meet their ESG obligations.

Keywords: Fund manager; Self-holding behavior; Fund sustainable investment; Investment motivation (search for similar items in EconPapers)
JEL-codes: G11 G12 G23 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:151:y:2025:i:c:s0264999325002378

DOI: 10.1016/j.econmod.2025.107242

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