Journal of Finance Vol. 72 No. 6 2017

Why Do Investors Hold Socially Responsible Mutual Funds?

Arno Riedl^1,2,3,4; Paul Smeets^3,5

¹ University of San Diego · ² Maastricht School of Management · ³ Heidelberg University · ⁴ Maastricht University · ⁵ Maastricht University Medical Centre

Abstract

To understand why investors hold socially responsible mutual funds, we link administrative data to survey responses and behavior in incentivized experiments. We find that both social preferences and social signaling explain socially responsible investment (SRI) decisions. Financial motives play less of a role. Socially responsible investors in our sample expect to earn lower returns on SRI funds than on conventional funds and pay higher management fees. This suggests that investors are willing to forgo financial performance in order to invest in accordance with their social preferences.

DOI

10.1111/jofi.12547

Volume

72

Issue

6

Pages

2505-2550

Language

en

Sources

bibtex:phds-export.bib openalex crossref

Cite

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