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Measuring Investors' Socially Responsible Preferences in Mutual Funds.

Authors :
Barreda-Tarrazona, Iván
Matallín-Sáez, Juan
Balaguer-Franch, Mª
Source :
Journal of Business Ethics; Oct2011, Vol. 103 Issue 2, p305-330, 26p, 14 Charts, 9 Graphs
Publication Year :
2011

Abstract

The aim of this study is to analyze investor behavior towards socially responsible mutual funds. The analysis is based on an experimental study where a sample of individuals takes investment decisions under different parameters of information about the investment alternatives and expected returns. In the experiment, each participant decides how to distribute an investment budget between two funds, returns on which are uncertain and change over time. Two treatments are conducted, each providing a different degree of information on the socially responsible (SR) character of one of the two investment alternatives. The results obtained suggest that although individuals' criteria for investment are essentially guided by returns and diversification, participants invest significantly more in a fund when they are explicitly informed about its SR nature. In particular, participants who declare being concerned about SR actually invest significantly more in the SR alternative. Furthermore, the level of SR faithfulness among a small group of investors is such that they invest the main share of their budget in the SR fund, even when the return differential is highly unfavorable. Providing clear information about the SR characteristics of an investment is crucial to help investors express their preferences. [ABSTRACT FROM AUTHOR]

Details

Language :
English
ISSN :
01674544
Volume :
103
Issue :
2
Database :
Complementary Index
Journal :
Journal of Business Ethics
Publication Type :
Academic Journal
Accession number :
65215913
Full Text :
https://doi.org/10.1007/s10551-011-0868-z