Does a Mutual Fund’s Exposure to Pollution Influence Its Environmental Engagements?

Journal of Banking & Finance - Accepted

60 Pages Posted: 9 Aug 2021 Last revised: 25 Mar 2024

See all articles by Pouyan Foroughi

Pouyan Foroughi

York University - Schulich School of Business

Alan J. Marcus

Boston College - Department of Finance

Vinh Nguyen

The University of Hong Kong

Date Written: August 8, 2021

Abstract

We study the relationship between mutual fund management’s direct experience with air pollution and the fund’s engagements with its portfolio companies on environmental issues. We find that higher air pollution in a fund’s home county increases its propensity to vote in support of shareholders’ environmental proposals. The effect is weakened by fund manager turnovers, and the managers’ affiliation with the Republican Party. Conversely, the effect is strengthened by more recent air-pollution events, and more highly contested environmental proposals. Overall, our results suggest that mutual fund management’s direct air-pollution experience plays a crucial role in motivating the fund’s environmental engagements.

Keywords: mutual fund voting, environment, air pollution

JEL Classification: G23, G30, G41

Suggested Citation

Foroughi, Pouyan and Marcus, Alan J. and Nguyen, Vinh, Does a Mutual Fund’s Exposure to Pollution Influence Its Environmental Engagements? (August 8, 2021). Journal of Banking & Finance - Accepted, Available at SSRN: https://ssrn.com/abstract=3901242 or http://dx.doi.org/10.2139/ssrn.3901242

Pouyan Foroughi

York University - Schulich School of Business ( email )

111 Ian MacDonald Blvd
North York, Ontario M3J 1P3
Canada

Alan J. Marcus

Boston College - Department of Finance ( email )

Fulton Hall
Chestnut Hill, MA 02467
United States
617-552-2767 (Phone)
617-552-0431 (Fax)

Vinh Nguyen (Contact Author)

The University of Hong Kong ( email )

833 KK Leung Building
Pok Fu Lam Road
Hong Kong
Hong Kong

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