86 Pages Posted: 1 Sep 2013 Last revised: 13 Feb 2017
Date Written: January 30, 2017
To understand why investors hold socially responsible (SRI) mutual funds, we use administrative data and link them to survey responses and behavior in incentivized experiments. We find that both social preferences and social signaling are important factors for SRI decisions. Financial motives also play a role but appear to be of limited importance. Socially responsible investors in our sample expect to earn lower returns on SRI 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.
Keywords: experimental finance, social preferences, socially responsible investments, mutual funds
JEL Classification: G11, D64, C90
Suggested Citation: Suggested Citation
Riedl, Arno and Smeets, Paul, Why Do Investors Hold Socially Responsible Mutual Funds? (January 30, 2017). Journal of Finance, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2318987 or http://dx.doi.org/10.2139/ssrn.2318987