ESG Spillovers

66 Pages Posted: 10 May 2022 Last revised: 12 Sep 2023

See all articles by Shangchen Li

Shangchen Li

Guanghua School of Management, Peking University

Hongxun Ruan

Guanghua School of Management, Peking University

Sheridan Titman

University of Texas at Austin - Department of Finance; National Bureau of Economic Research (NBER)

Haotian Xiang

Guanghua School of Management, Peking University

Multiple version iconThere are 2 versions of this paper

Date Written: September 12, 2023

Abstract

We study ESG and non-ESG mutual funds managed by overlapping teams. We find that non-ESG mutual funds include more high ESG stocks after the creation of an ESG sibling, and the high ESG stocks they select exhibit superior performance. The low ESG stocks selected by ESG funds also exhibit superior performance and despite being more constrained, the ESG funds outperform their non-ESG siblings. The latter result is consistent with fund families making choices that favor ESG funds. Specifically, ESG funds tend to trade illiquid stocks prior to their non-ESG siblings and get preferential IPO allocations.

Keywords: ESG, mutual fund, co-management, cross-fund subsidization

JEL Classification: G10, G11, G12, G23

Suggested Citation

Li, Shangchen and Ruan, Hongxun and Titman, Sheridan and Xiang, Haotian, ESG Spillovers (September 12, 2023). Available at SSRN: https://ssrn.com/abstract=4099947 or http://dx.doi.org/10.2139/ssrn.4099947

Shangchen Li

Guanghua School of Management, Peking University ( email )

Hongxun Ruan

Guanghua School of Management, Peking University ( email )

Peking University
Beijing, Beijing 100871
China

Sheridan Titman

University of Texas at Austin - Department of Finance ( email )

Red McCombs School of Business
Austin, TX 78712
United States
512-232-2787 (Phone)
512-471-5073 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Haotian Xiang (Contact Author)

Guanghua School of Management, Peking University ( email )

Beijing
China

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