Religious Belief and Socially Responsible Investing

55 Pages Posted: 2 Oct 2019

See all articles by John Bae

John Bae

Elon University - Love School of Business

Zheng Sun

University of California, Irvine - Paul Merage School of Business

Lu Zheng

University of California, Irvine - Paul Merage School of Business

Date Written: July 3, 2019

Abstract

In this study we investigate the effects of social considerations on the investment behavior of mutual fund managers. We propose a measure of investments in corporate social responsibility (CSR) by fund managers that captures the level of a manager’s tendency to invest in firms that engage in socially responsible activities. We find large and persistent cross-sectional variation in mutual funds’ CSR preferences. However, funds with greater CSR preference neither deliver higher returns nor enjoy higher flows. Religious belief, on the other hand, is shown to have a positive impact on a fund manager’s investment in firms with good CSR performance. We show funds that are located in highly religious areas and whose managers graduated from colleges in regions with high religiosity are more likely to invest in high-CSR stocks. Our results are consistent with non-pecuniary “pro-social” motives influencing the investment decisions of money managers.

Keywords: Religiosity, Corporate Social Responsibility, Fund CSR Preference

Suggested Citation

Bae, John and Sun, Zheng and Zheng, Lu, Religious Belief and Socially Responsible Investing (July 3, 2019). Available at SSRN: https://ssrn.com/abstract=3414530 or http://dx.doi.org/10.2139/ssrn.3414530

John Bae

Elon University - Love School of Business ( email )

Elon, NC 27244
United States

Zheng Sun (Contact Author)

University of California, Irvine - Paul Merage School of Business ( email )

Paul Merage School of Business
Irvine, CA California 92697-3125
United States

Lu Zheng

University of California, Irvine - Paul Merage School of Business ( email )

Paul Merage School of Business
Irvine, CA California 92697-3125
United States
9498248365 (Phone)

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