Can green investments increase your green?: evidence from social hedge fund activists
In our study, we examine the association between hedge fund activism and a target firm's corporate social responsibility (CSR) activities and whether activists can promote socially responsible investments while upholding shareholders' interests. Using different matched samples, we find a s...
| Authors: | ; ; ; |
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| Format: | Electronic Article |
| Language: | English |
| Check availability: | HBZ Gateway |
| Journals Online & Print: | Drawer...
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| Fernleihe: | Fernleihe für die Fachinformationsdienste |
| Published: |
Springer Science + Business Media B. V
2023
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| In: |
Journal of business ethics
Year: 2023, Volume: 187, Issue: 4, Pages: 781-801 |
| Further subjects: | B
CSR
B Social fund B Aufsatz in Zeitschrift B Hedge fund |
| Online Access: |
Volltext (lizenzpflichtig) Volltext (lizenzpflichtig) |
| Summary: | In our study, we examine the association between hedge fund activism and a target firm's corporate social responsibility (CSR) activities and whether activists can promote socially responsible investments while upholding shareholders' interests. Using different matched samples, we find a strong positive association between the target firm's CSR in the year before it is targeted by activists and its probability of being targeted by a hedge fund. Classifying hedge fund activists into socially and non-socially responsible funds based on their objectives, we find that both give similar level of consideration to a firm's CSR activities when initiating campaigns. Similar to DesJardine and Durand (DesJardine and Durand, Strategic Management Journal 41:1054-1082, 2020), we demonstrate that hedge funds have, on average, a negative impact on target firms’ CSR in the years following the initial investments. Complementary to DesJardine and Durand (DesJardine and Durand, Strategic Management Journal 41:1054-1082, 2020), we compare the two types of hedge funds and find an asymmetric effect of the hedge funds' campaigns. Socially responsible hedge fund campaigns are associated with a large increase in their target's CSR, whereas non-socially responsible hedge funds decrease this measure in their target. Finally, we find that target firms exhibit a long-term improvement in future stock returns and profitability. These findings provide evidence that certain types of activists, such as socially responsible funds, promote both stakeholder and shareholders' long-term interests. |
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| ISSN: | 1573-0697 |
| Contains: | Enthalten in: Journal of business ethics
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| Persistent identifiers: | DOI: 10.1007/s10551-022-05230-x |