Journal
JOURNAL OF FINANCIAL ECONOMICS
Volume 103, Issue 1, Pages 1-19Publisher
ELSEVIER SCIENCE SA
DOI: 10.1016/j.jfineco.2011.01.006
Keywords
Mutual funds; Political values; Portfolio decisions; SRI
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Using data on the political contributions and stock holdings of U.S. investment managers, we find that mutual fund managers who make campaign donations to Democrats hold less of their portfolios (relative to non-donors or Republican donors) in companies that are deemed socially irresponsible (e.g., tobacco, guns, or defense firms or companies with bad employee relations or diversity records). Although explicit socially responsible investing (SRI) funds are more likely to be managed by Democratic managers, this result holds for non-SRI funds and after controlling for other fund and manager characteristics. The effect is more than one-half of the underweighting observed for SRI funds. (C) 2011 Elsevier B.V. All rights reserved.
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