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Is corporate social responsibility sufficient enough to explain the investment by socially responsible funds?

Tosun, Onur Kemal 2017. Is corporate social responsibility sufficient enough to explain the investment by socially responsible funds? Review of Quantitative Finance and Accounting 49 (3) , pp. 697-726. 10.1007/s11156-016-0605-x

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Abstract

I propose an explanation for investment decisions by socially responsible investment funds (SRI) on the firms with higher corporate social responsibility (CSR). Different from the previous literature, I use a unique and comprehensive measure that considers both firm CSR ratings and fund CSR perception. I show SRI mutual funds increase their ownership about 15 % for one unit increase in the firm CSR score when those funds are highly sensitive to CSR. This finding is more pronounced for employee relations and society areas of CSR. The results also hold for a broader range of mutual funds. While industry concentration does not have influence on the fund investment, SRI funds particularly choose socially responsible firms operating in construction, transportation, personal services, and financial sector. I show the funds with CSR sensitivity underperform the market in general and fail to improve their portfolio performance after they invest in the firms with high CSR.

Item Type: Article
Date Type: Publication
Status: Published
Schools: Business (Including Economics)
Additional Information: This article is distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium, provided you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license, and indicate if changes were made.
Publisher: Springer Verlag
ISSN: 0924-865X
Date of First Compliant Deposit: 2 May 2019
Date of Acceptance: 19 September 2016
Last Modified: 07 Jul 2020 13:01
URI: http://orca.cf.ac.uk/id/eprint/122090

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