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Do sovereign wealth funds value ESG engagement? Evidence from target firm's CSR performance

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  • Dai, Liyan
  • Song, Chengxuan
  • You, Yu
  • Zhang, Wenqiao

Abstract

This paper investigates whether Sovereign Wealth Funds (SWFs) value target firm's ESG engagement when making investment decisions. Using CSR scores as a measurement for ESG engagement, we find robust evidence that SWFs are more likely to invest in firms with a higher CSR score. Furthermore, firms with higher CSR scores attract more SWFs to invest. Our study identifies a possible determinant in the investment decision making process of SWFs.

Suggested Citation

  • Dai, Liyan & Song, Chengxuan & You, Yu & Zhang, Wenqiao, 2022. "Do sovereign wealth funds value ESG engagement? Evidence from target firm's CSR performance," Finance Research Letters, Elsevier, vol. 50(C).
    • Handle: RePEc:eee:finlet:v:50:y:2022:i:c:s1544612322004287
    DOI: 10.1016/j.frl.2022.103226
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    1. Bernardo Bortolotti & Giacomo Loss & Robert W. Zwieten, 2023. "The times are they a-changin’? Tracking sovereign wealth funds’ sustainable investing," Journal of International Business Policy, Palgrave Macmillan, vol. 6(3), pages 276-305, September.
    2. Balestra, Anna & Caruso, Raul & Di Domizio, Marco, 2024. "What explains the size of Sovereign Wealth Funds? A panel analysis (2008–2018)," Finance Research Letters, Elsevier, vol. 62(PB).
    3. Yu Zhang & Xiaotong Wang & Wei Guo & Xinlei Guo & Qisheng Wang & Xin Tan, 2024. "Does ESG Performance Affect the Enterprise Value of China’s Heavily Polluting Listed Companies?," Sustainability, MDPI, vol. 16(7), pages 1-21, March.

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    More about this item

    Keywords

    Sovereign wealth funds; Corporate social responsibility; ESG investments;
    All these keywords.

    JEL classification:

    • G0 - Financial Economics - - General
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G3 - Financial Economics - - Corporate Finance and Governance

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