Responsible Hedge Funds
Abstract Hedge funds that endorse the United Nations Principles for Responsible Investment (PRI) underperform other hedge funds after adjusting for risk but attract greater investor flows, accumulate more assets, and harvest greater fee revenues. Consistent with an agency explanation, the underperfo...
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| Veröffentlicht in: | Review of Finance 2022-11, Vol.26 (6), p.1585-1633 |
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| container_issue | 6 |
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| container_title | Review of Finance |
| container_volume | 26 |
| creator | Liang, Hao Sun, Lin Teo, Melvyn |
| description | Abstract
Hedge funds that endorse the United Nations Principles for Responsible Investment (PRI) underperform other hedge funds after adjusting for risk but attract greater investor flows, accumulate more assets, and harvest greater fee revenues. Consistent with an agency explanation, the underperformance is driven by PRI signatories with low environmental, social, and governance (ESG) exposures and is greater for hedge funds with poor incentive alignment. To address endogeneity, we exploit regulatory reforms that enhance stewardship and show that the ESG exposure and relative performance of signatory funds improve post reforms. Our findings suggest that some hedge funds endorse responsible investment to pander to investor preferences. |
| doi_str_mv | 10.1093/rof/rfac028 |
| format | Article |
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Hedge funds that endorse the United Nations Principles for Responsible Investment (PRI) underperform other hedge funds after adjusting for risk but attract greater investor flows, accumulate more assets, and harvest greater fee revenues. Consistent with an agency explanation, the underperformance is driven by PRI signatories with low environmental, social, and governance (ESG) exposures and is greater for hedge funds with poor incentive alignment. To address endogeneity, we exploit regulatory reforms that enhance stewardship and show that the ESG exposure and relative performance of signatory funds improve post reforms. Our findings suggest that some hedge funds endorse responsible investment to pander to investor preferences.</description><identifier>ISSN: 1572-3097</identifier><identifier>EISSN: 1573-692X</identifier><identifier>EISSN: 1875-824X</identifier><identifier>DOI: 10.1093/rof/rfac028</identifier><language>eng</language><publisher>Oxford University Press</publisher><ispartof>Review of Finance, 2022-11, Vol.26 (6), p.1585-1633</ispartof><rights>The Author(s) 2022. Published by Oxford University Press on behalf of the European Finance Association. 2022</rights><lds50>peer_reviewed</lds50><oa>free_for_read</oa><woscitedreferencessubscribed>false</woscitedreferencessubscribed><citedby>FETCH-LOGICAL-c359t-f457492cbbd2102d71741bb64a1ed6c4465939bcdb6a350601e503ad421c1e743</citedby><cites>FETCH-LOGICAL-c359t-f457492cbbd2102d71741bb64a1ed6c4465939bcdb6a350601e503ad421c1e743</cites></display><links><openurl>$$Topenurl_article</openurl><openurlfulltext>$$Topenurlfull_article</openurlfulltext><thumbnail>$$Tsyndetics_thumb_exl</thumbnail><link.rule.ids>314,780,784,1584,27924,27925</link.rule.ids></links><search><creatorcontrib>Liang, Hao</creatorcontrib><creatorcontrib>Sun, Lin</creatorcontrib><creatorcontrib>Teo, Melvyn</creatorcontrib><title>Responsible Hedge Funds</title><title>Review of Finance</title><description>Abstract
Hedge funds that endorse the United Nations Principles for Responsible Investment (PRI) underperform other hedge funds after adjusting for risk but attract greater investor flows, accumulate more assets, and harvest greater fee revenues. Consistent with an agency explanation, the underperformance is driven by PRI signatories with low environmental, social, and governance (ESG) exposures and is greater for hedge funds with poor incentive alignment. To address endogeneity, we exploit regulatory reforms that enhance stewardship and show that the ESG exposure and relative performance of signatory funds improve post reforms. Our findings suggest that some hedge funds endorse responsible investment to pander to investor preferences.</description><issn>1572-3097</issn><issn>1573-692X</issn><issn>1875-824X</issn><fulltext>true</fulltext><rsrctype>article</rsrctype><creationdate>2022</creationdate><recordtype>article</recordtype><sourceid>TOX</sourceid><recordid>eNp9jztLA0EURgdRMEYrC9utbGSTe-fOY6eUYIwQCIiC3TKvlZW4u8yYwn9v4gbsrL6vOBw4jF0jzBAMzVPfzFNjPfDqhE1QaiqV4W-nv5-XBEafs4ucPwCIOMkJu3mOeei73LptLFYxvMdiuetCvmRnjd3meHXcKXtdPrwsVuV68_i0uF-XnqT5KhshtTDcOxc4Ag8atUDnlLAYg_JCKGnIOB-csiRBAUYJZIPg6DFqQVN2N3p96nNOsamH1H7a9F0j1Iemet9UH5v2dDHS0fddm__YihTxCsRBeDsi_W741_UD8c9V6w</recordid><startdate>20221114</startdate><enddate>20221114</enddate><creator>Liang, Hao</creator><creator>Sun, Lin</creator><creator>Teo, Melvyn</creator><general>Oxford University Press</general><scope>TOX</scope><scope>OQ6</scope><scope>AAYXX</scope><scope>CITATION</scope></search><sort><creationdate>20221114</creationdate><title>Responsible Hedge Funds</title><author>Liang, Hao ; Sun, Lin ; Teo, Melvyn</author></sort><facets><frbrtype>5</frbrtype><frbrgroupid>cdi_FETCH-LOGICAL-c359t-f457492cbbd2102d71741bb64a1ed6c4465939bcdb6a350601e503ad421c1e743</frbrgroupid><rsrctype>articles</rsrctype><prefilter>articles</prefilter><language>eng</language><creationdate>2022</creationdate><toplevel>peer_reviewed</toplevel><toplevel>online_resources</toplevel><creatorcontrib>Liang, Hao</creatorcontrib><creatorcontrib>Sun, Lin</creatorcontrib><creatorcontrib>Teo, Melvyn</creatorcontrib><collection>Access via Oxford University Press (Open Access Collection)</collection><collection>ECONIS</collection><collection>CrossRef</collection><jtitle>Review of Finance</jtitle></facets><delivery><delcategory>Remote Search Resource</delcategory><fulltext>fulltext</fulltext></delivery><addata><au>Liang, Hao</au><au>Sun, Lin</au><au>Teo, Melvyn</au><format>journal</format><genre>article</genre><ristype>JOUR</ristype><atitle>Responsible Hedge Funds</atitle><jtitle>Review of Finance</jtitle><date>2022-11-14</date><risdate>2022</risdate><volume>26</volume><issue>6</issue><spage>1585</spage><epage>1633</epage><pages>1585-1633</pages><issn>1572-3097</issn><eissn>1573-692X</eissn><eissn>1875-824X</eissn><abstract>Abstract
Hedge funds that endorse the United Nations Principles for Responsible Investment (PRI) underperform other hedge funds after adjusting for risk but attract greater investor flows, accumulate more assets, and harvest greater fee revenues. Consistent with an agency explanation, the underperformance is driven by PRI signatories with low environmental, social, and governance (ESG) exposures and is greater for hedge funds with poor incentive alignment. To address endogeneity, we exploit regulatory reforms that enhance stewardship and show that the ESG exposure and relative performance of signatory funds improve post reforms. Our findings suggest that some hedge funds endorse responsible investment to pander to investor preferences.</abstract><pub>Oxford University Press</pub><doi>10.1093/rof/rfac028</doi><tpages>49</tpages><oa>free_for_read</oa></addata></record> |
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| identifier | ISSN: 1572-3097 |
| ispartof | Review of Finance, 2022-11, Vol.26 (6), p.1585-1633 |
| issn | 1572-3097 1573-692X 1875-824X |
| language | eng |
| recordid | cdi_crossref_primary_10_1093_rof_rfac028 |
| source | EBSCOhost Business Source Complete; Oxford University Press Journals Current |
| title | Responsible Hedge Funds |
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