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Screening Strategies and Fund Type as Drivers of Socially Responsible Investment: Evidence from Asset Management Companies in Pakistan

Author

Listed:
  • Zahid Bashir

    (Hailey College of Commerce, University of Punjab, Lahore, Pakistan)

  • Muhammad Aamir

    (Hailey College of Commerce, University of the Punjab, Lahore, Pakistan)

  • Muhammad Sabeeh Iqbal

    (Hailey College of Commerce, University of the Punjab, Lahore, Pakistan)

Abstract

There has been a strong surge of socially responsible investment (SRI), globally. However, the adoption of such initiatives remains under investigated in the financial institutions (FIs) of vulnerable economies (e.g., Pakistan). More specifically, such contexts lack empirical evidence regarding the impact of screening strategies and fund type on SRI adoption. Therefore, the current research examines these factors for asset management companies (AMCs) as sampled FIs in Pakistan. For this purpose, unbalanced panel data (2008-2024) of 29 AMCs from Pakistan is collected. The estimation methods include static panel techniques such as fixed effects (FE), random effects (RE), and pooled ordinarily least square (OLS). The outcome variable is SRI ratio, while the input variables are SRI screening and fund types. Similarly, the control variables include firm size, return on equity (ROE), book to market (B/M) ratio, leverage, and environmental, social, and governance (ESG) score. The results indicate that positive screening and equity-based funds play a critical role in enhancing the SRI ratio in Pakistani AMCs. Moreover, fund type strengthens the impact of positive screening on SRI ratio for such AMCs. The findings related to positive screening and equity-based fund type support the application of the SRI theory. This result highlights a number of practical implications for regulators and fund managers in FIs. For example, policymakers should consider positive screening and promote equity-based SRI funds in their FIs. Finally, the findings of this study are novel due to addressing the problem in the under-examined context of a vulnerable economy like Pakistan.

Suggested Citation

  • Zahid Bashir & Muhammad Aamir & Muhammad Sabeeh Iqbal, 2025. "Screening Strategies and Fund Type as Drivers of Socially Responsible Investment: Evidence from Asset Management Companies in Pakistan," Audit and Accounting Review, University of Management and Technology, Lahore, Pakistan, vol. 5(02), pages 93-114, December.
    • Handle: RePEc:ris:aarumt:022399
    DOI: 10.32350/aar.52.05
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    Keywords

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    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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