IDEAS home Printed from https://ideas.repec.org/p/ebg/heccah/1607.html

Are Socially Responsible Funds Viable?

Author

Listed:
  • Voss, Paul

    (HEC Paris - Finance Department)

  • Mathews, Richmond D.

    (Department of Finance)

  • Jenter, Dirk

    (London School of Economics & Political Science (LSE) - Department of Finance; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI))

  • Dasgupta, Amil

    (London School of Economics (LSE); European Corporate Governance Institute (ECGI))

Abstract

We study the viability of socially responsible (SR) funds when investors are small, have social preferences, and can cheaply invest in other ways. In a static setting, SR "impact" funds, which engage with dirty firms at a cost, cannot exist due to free riding, regardless of the type of social preferences. SR exclusion funds with reduced ownership of dirty firms can exist, but only if investors' social preferences are "warm glow," i.e., tied to the extent of ownership. In a dynamic setting, we demonstrate a symbiosis between SR fund types-the existence of exclusion funds allows impact funds to profit by buying and then cleaning up dirty firms.

Suggested Citation

  • Voss, Paul & Mathews, Richmond D. & Jenter, Dirk & Dasgupta, Amil, 2025. "Are Socially Responsible Funds Viable?," HEC Research Papers Series 1607, HEC Paris, revised 30 Jan 2026.
    • Handle: RePEc:ebg:heccah:1607
    DOI: 10.2139/ssrn.5761204
    as

    Download full text from publisher

    File URL: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5761204
    File Function: Full text
    Download Restriction: no
    File URL: https://libkey.io/10.2139/ssrn.5761204?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Keywords

    ;
    ;
    ;

    JEL classification:

    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • 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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ebg:heccah:1607. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Antoine Haldemann The email address of this maintainer does not seem to be valid anymore. Please ask Antoine Haldemann to update the entry or send us the correct address (email available below). General contact details of provider: https://edirc.repec.org/data/hecpafr.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.