Does Socially Responsible Investing Change Firm Behavior?

Does Socially Responsible Investing Change Firm Behavior?

Davidson Heath, Daniele Macciocchi, Roni Michaely, Matthew C. Ringgenberg

Series number :

Serial Number: 

Date posted :

May 18 2021

Last revised :

September 14 2021
SSRN Share


  • Environmental • 
  • Social • 
  • and Governance (ESG) • 
  • Institutional Investing • 
  • socially responsible investing (SRI) • 
  • Sustainability

Socially responsible investment (SRI) funds are increasing in popularity. Yet, it is unclear if these funds improve corporate behavior. Using novel micro-level data, we find that SRI funds select firms with higher environmental and social standards: the firms they hold exhibit lower pollution, greater board diversity, higher employee satisfaction, and higher workplace safety.

Yet, using an exogenous shock to SRI capital, we find no evidence that SRI funds improve firm behavior. The results suggest SRI funds invest in a portfolio consistent with the fund's objective, but they do not significantly improve corporate conduct.


Real name:
Matthew C. Ringgenberg
Real name:
Davidson Heath
Real name:
Daniele Macciocchi