Are Socially Responsible Funds Viable?

Amil Dasgupta, Dirk Jenter, Richmond Mathews and Paul Voss
Additional contact information
Amil Dasgupta: LSE - London School of Economics and Political Science
Dirk Jenter: LSE - London School of Economics and Political Science, CEPR - Center for Economic Policy Research
Richmond Mathews: Department of Finance
Paul Voss: HEC Paris - Ecole des Hautes Etudes Commerciales

Working Papers from HAL

Abstract: We study the viability of socially responsible (SR) funds when investors are small, have social preferences, and can cheaply invest in other ways. In a static setting, SR "impact" funds, which engage with dirty firms at a cost, cannot exist due to free riding, regardless of the type of social preferences. SR exclusion funds with reduced ownership of dirty firms can exist, but only if investors' social preferences are "warm glow," i.e., tied to the extent of ownership. In a dynamic setting, we demonstrate a symbiosis between SR fund types-the existence of exclusion funds allows impact funds to profit by buying and then cleaning up dirty firms.

Keywords: Impact funds; dirty firms; warm glow (search for similar items in EconPapers)
Date: 2026-01-29
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

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:hal:wpaper:hal-05562865

DOI: 10.2139/ssrn.5761204

Access Statistics for this paper

More papers in Working Papers from HAL
Bibliographic data for series maintained by CCSD ().