State pension funds and corporate social responsibility: do beneficiaries’ political values influence funds’ investment decisions?

Hoepner, A. G. F. and Schopohl, L. ORCID: https://orcid.org/0000-0002-2150-3593 (2020) State pension funds and corporate social responsibility: do beneficiaries’ political values influence funds’ investment decisions? Journal of Business Ethics, 165. pp. 489-516. ISSN 1573-0697 doi: 10.1007/s10551-018-4091-z

Abstract/Summary

This study explores the underlying drivers of US public pension funds’ tendency to tilt their portfolios towards companies with stronger corporate social responsibility (CSR). Studying the equity holdings of large, internally-managed US state pension funds, we find evidence that the political leaning of their beneficiaries and political pressures by state politicians affect funds’ investment decisions. State pension funds from states with Democratic-leaning beneficiaries tilt their portfolios more strongly towards companies that perform well on CSR issues, and this tendency is intensified when the state government is dominated by Democratic state politicians. Moreover, we find that funds which tilt their portfolios towards companies with superior CSR scores generate a slightly higher return compared with their counterparts. Overall, our findings indicate that funds align their investment choices with the financial and non-financial interests of their beneficiaries when deciding whether to incorporate CSR into their equity allocations.

Item Type	Article
URI	https://reading-clone.eprints-hosting.org/id/eprint/81152
Identification Number/DOI	10.1007/s10551-018-4091-z
Refereed	Yes
Divisions	Henley Business School > Finance and Accounting
Publisher	Springer
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