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Commitment to the ESG investing and Individual Mutual Fund Investors’ Preference: Evidence from Stated Choice Experiments

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  • Hongyu Xiang

Abstract

Using stated choice experiments, this paper tests the causal effect of mutual funds’ commitment to the ESG investing by signing the UNPRI on individual investors’ preference for mutual funds. I find that signing the UNPRI will make mutual funds more attractive to investors. The estimated WTP is approximately 4% in terms of the annual management fees, both statistically and economically significant. The effect of signing the UNPRI on investor preference is not significantly different among investors with different sex, income, risk attitude, and mutual fund investment experience. However, it is larger among the older investors than the younger.  JEL classification numbers: G20, G50.

Suggested Citation

  • Hongyu Xiang, 2024. "Commitment to the ESG investing and Individual Mutual Fund Investors’ Preference: Evidence from Stated Choice Experiments," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 14(2), pages 1-6.
    • Handle: RePEc:spt:apfiba:v:14:y:2024:i:2:f:14_2_6
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    References listed on IDEAS

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    1. Daniel McFadden & Kenneth Train, 2000. "Mixed MNL models for discrete response," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 15(5), pages 447-470.
    2. Humphrey, Jacquelyn E. & Li, Yong, 2021. "Who goes green: Reducing mutual fund emissions and its consequences," Journal of Banking & Finance, Elsevier, vol. 126(C).
    3. Florian Heeb & Julian F Kölbel & Falko Paetzold & Stefan Zeisberger, 2023. "Do Investors Care about Impact?," The Review of Financial Studies, Society for Financial Studies, vol. 36(5), pages 1737-1787.
    4. Gutsche, Gunnar & Wetzel, Heike & Ziegler, Andreas, 2023. "Determinants of individual sustainable investment behavior - A framed field experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 209(C), pages 491-508.
    5. Soohun Kim & Aaron Yoon, 2023. "Analyzing Active Fund Managers’ Commitment to ESG: Evidence from the United Nations Principles for Responsible Investment," Management Science, INFORMS, vol. 69(2), pages 741-758, February.
    6. Harasheh, Murad & Bouteska, Ahmed & Manita, Riadh, 2024. "Investors' preferences for sustainable investments: Evidence from the U.S. using an experimental approach," Economics Letters, Elsevier, vol. 234(C).
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    More about this item

    Keywords

    UNPRI; Choice Experiment; ESG.;
    All these keywords.

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G50 - Financial Economics - - Household Finance - - - General

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