The Role of Mutual Funds in Corporate Social Responsibility
This paper examines the role of mutual funds in corporate social responsibility (CSR). Using a fund-level, holdings-based CSR score, we find that CSR-friendly mutual funds improve firms' CSR standings. This effect is more pronounced for firms with higher mutual fund ownership and stronger corpo...
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| Veröffentlicht in: | Journal of business ethics 2021-12, Vol.174 (3), p.715-737 |
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| container_title | Journal of business ethics |
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| creator | Li, Zhichuan Frank Patel, Saurin Ramani, Srikanth |
| description | This paper examines the role of mutual funds in corporate social responsibility (CSR). Using a fund-level, holdings-based CSR score, we find that CSR-friendly mutual funds improve firms' CSR standings. This effect is more pronounced for firms with higher mutual fund ownership and stronger corporate governance. We further show that while CSR-friendly mutual funds have influence on almost all CSR categories, they focus on increasing CSR strengths rather than reducing CSR concerns. We also discover that CSR-friendly funds are more likely to vote in favor of CSR proposals, and that firms owned by CSR-friendly funds are more likely to link their CEO compensation to CSR outcomes. These results suggest that actively managed mutual funds, which were previously thought to be indifferent (or even detrimental) to social and ethical issues, play a significant role in corporate social outcomes of the firms they invest in. |
| doi_str_mv | 10.1007/s10551-020-04618-x |
| format | Article |
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Using a fund-level, holdings-based CSR score, we find that CSR-friendly mutual funds improve firms' CSR standings. This effect is more pronounced for firms with higher mutual fund ownership and stronger corporate governance. We further show that while CSR-friendly mutual funds have influence on almost all CSR categories, they focus on increasing CSR strengths rather than reducing CSR concerns. We also discover that CSR-friendly funds are more likely to vote in favor of CSR proposals, and that firms owned by CSR-friendly funds are more likely to link their CEO compensation to CSR outcomes. These results suggest that actively managed mutual funds, which were previously thought to be indifferent (or even detrimental) to social and ethical issues, play a significant role in corporate social outcomes of the firms they invest in.</description><identifier>ISSN: 0167-4544</identifier><identifier>EISSN: 1573-0697</identifier><identifier>DOI: 10.1007/s10551-020-04618-x</identifier><language>eng</language><publisher>Dordrecht: Springer</publisher><subject>Business and Management ; Business Ethics ; Companies ; Compensation ; Corporate governance ; Education ; Ethical dilemmas ; Ethics ; Management ; Mutual funds ; Original Paper ; Ownership ; Philosophy ; Quality of Life Research ; Social responsibility</subject><ispartof>Journal of business ethics, 2021-12, Vol.174 (3), p.715-737</ispartof><rights>Springer Nature B.V. 2021</rights><rights>Springer Nature B.V. 2020</rights><rights>Springer Nature B.V. 2020.</rights><lds50>peer_reviewed</lds50><woscitedreferencessubscribed>false</woscitedreferencessubscribed><citedby>FETCH-LOGICAL-c431t-48284bb3d57c2257bca0a693147b2ddb50e3cef3d3af529d068ea2d507af7d163</citedby><cites>FETCH-LOGICAL-c431t-48284bb3d57c2257bca0a693147b2ddb50e3cef3d3af529d068ea2d507af7d163</cites></display><links><openurl>$$Topenurl_article</openurl><openurlfulltext>$$Topenurlfull_article</openurlfulltext><thumbnail>$$Tsyndetics_thumb_exl</thumbnail><linktopdf>$$Uhttps://link.springer.com/content/pdf/10.1007/s10551-020-04618-x$$EPDF$$P50$$Gspringer$$H</linktopdf><linktohtml>$$Uhttps://link.springer.com/10.1007/s10551-020-04618-x$$EHTML$$P50$$Gspringer$$H</linktohtml><link.rule.ids>314,776,780,27843,27901,27902,41464,42533,51294</link.rule.ids></links><search><creatorcontrib>Li, Zhichuan Frank</creatorcontrib><creatorcontrib>Patel, Saurin</creatorcontrib><creatorcontrib>Ramani, Srikanth</creatorcontrib><title>The Role of Mutual Funds in Corporate Social Responsibility</title><title>Journal of business ethics</title><addtitle>J Bus Ethics</addtitle><description>This paper examines the role of mutual funds in corporate social responsibility (CSR). Using a fund-level, holdings-based CSR score, we find that CSR-friendly mutual funds improve firms' CSR standings. This effect is more pronounced for firms with higher mutual fund ownership and stronger corporate governance. We further show that while CSR-friendly mutual funds have influence on almost all CSR categories, they focus on increasing CSR strengths rather than reducing CSR concerns. We also discover that CSR-friendly funds are more likely to vote in favor of CSR proposals, and that firms owned by CSR-friendly funds are more likely to link their CEO compensation to CSR outcomes. These results suggest that actively managed mutual funds, which were previously thought to be indifferent (or even detrimental) to social and ethical issues, play a significant role in corporate social outcomes of the firms they invest in.</description><subject>Business and Management</subject><subject>Business Ethics</subject><subject>Companies</subject><subject>Compensation</subject><subject>Corporate governance</subject><subject>Education</subject><subject>Ethical dilemmas</subject><subject>Ethics</subject><subject>Management</subject><subject>Mutual funds</subject><subject>Original Paper</subject><subject>Ownership</subject><subject>Philosophy</subject><subject>Quality of Life Research</subject><subject>Social 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| source | Education Source; Springer Nature - Complete Springer Journals; PAIS Index; Business Source Complete |
| subjects | Business and Management Business Ethics Companies Compensation Corporate governance Education Ethical dilemmas Ethics Management Mutual funds Original Paper Ownership Philosophy Quality of Life Research Social responsibility |
| title | The Role of Mutual Funds in Corporate Social Responsibility |
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