Socially Responsible Investments: Costs and Benefits for University Endowment Funds

55 Pages Posted: 7 Sep 2019 Last revised: 8 Dec 2019

See all articles by George O. Aragon

George O. Aragon

Arizona State University (ASU) - Finance Department

Yuxiang Jiang

Southwestern University of Finance and Economics (SWUFE)

Juha Joenväärä

Aalto University School of Business; University of Maryland - Robert H. Smith School of Business

Cristian Ioan Tiu

University at Buffalo; TIAA Institute

Date Written: December 7, 2019

Abstract

We examine the socially responsible investment (SRI) policies of university endowment funds over 2009-2017. SRI policies are more common when funds face greater stakeholder pressure to adopt such policies, and among universities that are more donation-dependent and located in environments with greater corporate social responsibility. SRI policy adoption predicts greater donations, especially from “socially-conscious” donors, but impose a drag on fund performance. On balance, SRI and non-SRI funds produce similar total additions (investment income plus donations), consistent with an optimal contracting equilibrium. SRI policies also yield non-pecuniary benefits, including enhanced risk management practices by the fund and a larger number of university applications.

Keywords: Endowments, socially responsible investing, charitable donations

JEL Classification: G13, G14

Suggested Citation

Aragon, George O. and Jiang, Yuxiang and Joenvaara, Juha and Tiu, Cristian Ioan, Socially Responsible Investments: Costs and Benefits for University Endowment Funds (December 7, 2019). Available at SSRN: https://ssrn.com/abstract=3446252 or http://dx.doi.org/10.2139/ssrn.3446252

George O. Aragon (Contact Author)

Arizona State University (ASU) - Finance Department ( email )

W. P. Carey School of Business
PO Box 873906
Tempe, AZ 85287-3906
United States

Yuxiang Jiang

Southwestern University of Finance and Economics (SWUFE) ( email )

555 Liutai Avenue
Chengdu, Sichuan 611130
China

Juha Joenvaara

Aalto University School of Business ( email )

Finland

University of Maryland - Robert H. Smith School of Business ( email )

MD
United States

Cristian Ioan Tiu

University at Buffalo ( email )

238 Jacobs Management Center
Jacobs Hall, North Campus
Buffalo, NY NY 14260
United States
7166453299 (Phone)

TIAA Institute ( email )

8500 Andrew Carnegie Blvd
E3/S8
Charlotte, NC 28262
United States

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