The Journal of Finance· 2019Q1
Do Investors Value Sustainability? A Natural Experiment Examining Ranking and Fund Flows
- 1,519citations
- Q1SCImago
- 2019year
Short summary
Investors are willing to pay for sustainability: funds categorized as low sustainability experienced net outflows exceeding $12 billion, while high-sustainability funds saw net inflows over $24 billion, following a marketwide shock to sustainability salience.
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Key points
- Low-sustainability funds experienced net outflows of over $12 billion.
- High-sustainability funds attracted net inflows of over $24 billion.
- Investors perceive sustainability as a predictor of future performance.
- No evidence was found that high-sustainability funds actually outperform low-sustainability funds.
AI-generated from the title and abstract; the full text is not read.
Abstract
ABSTRACT Examining a shock to the salience of the sustainability of the U.S. mutual fund market, we present causal evidence that investors marketwide value sustainability: being categorized as low sustainability resulted in net outflows of more than $12 billion while being categorized as high sustainability led to net inflows of more than $24 billion. Experimental evidence suggests that sustainability is viewed as positively predicting future performance, but we do not find evidence that high‐sustainability funds outperform low‐sustainability funds. The evidence is consistent with positive affect influencing expectations of sustainable fund performance and nonpecuniary motives influencing investment decisions.
The authors' abstract, as published at the source. The Journal of Finance, 2019 · DOI ↗
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Field: Strategy and Management
Strategy and ManagementBusiness, Management and Accounting