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Ethical window dressing: SRI funds are as good as their word

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  • Muñoz, Fernando
  • Ortiz, Cristina
  • Vicente, Luis

Abstract

In this research, we tested the existence of ethical window dressing in the Socially Responsible Investment (SRI) domestic equity funds registered in the US market. For this purpose, we compared the environmental, social, and corporate governance (ESG) attributes of disclosed and undisclosed portfolios. We reject that the ESG portfolio image is significantly better in reporting months than in non-reporting months. Examining portfolio trading based on different proxies, we found residual signals of ethical window dressing. None of these signals correspond to easy-to-interpret information. Thus, SRI funds do not manipulate the disclosed ESG image to attract money flows.

Suggested Citation

  • Muñoz, Fernando & Ortiz, Cristina & Vicente, Luis, 2022. "Ethical window dressing: SRI funds are as good as their word," Finance Research Letters, Elsevier, vol. 49(C).
    • Handle: RePEc:eee:finlet:v:49:y:2022:i:c:s1544612322003336
    DOI: 10.1016/j.frl.2022.103109
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    2. Fleta-Asín, Jorge & Muñoz, Fernando, 2023. "Institutional distance and US-based international mutual funds’ financial performance," Finance Research Letters, Elsevier, vol. 51(C).

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