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Does the self-holding behavior of fund managers foster fund sustainable investment?

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  • Wang, Hu
  • Lian, Yuanqiang
  • Shen, Hong

Abstract

Whether fund managers investing in their own funds, a practice often viewed as a way to align interests and mitigate agency conflicts, actually encourages sustainable investment remains an important but underexplored question. Leveraging data on fund managers' personal fund holdings, portfolio compositions, and environmental, sustainability, and governance (ESG) ratings, we examine how self-holding behavior relates to funds' sustainable investment practices. Our results show a positive association between fund managers’ self-investment and fund sustainable investment. Fund managers who invest in the funds they manage are more likely to adopt sustainable investment strategies aimed at boosting returns and reducing portfolio risk. Moreover, firms held by these funds experience lower stock price crash risk and demonstrate a stronger tendency to meet their ESG obligations.

Suggested Citation

  • Wang, Hu & Lian, Yuanqiang & Shen, Hong, 2025. "Does the self-holding behavior of fund managers foster fund sustainable investment?," Economic Modelling, Elsevier, vol. 151(C).
    • Handle: RePEc:eee:ecmode:v:151:y:2025:i:c:s0264999325002378
    DOI: 10.1016/j.econmod.2025.107242
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    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

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