Socially responsible mutual fund activism - evidence from socially responsible mutual fund proxy voting and exit behavior

University essay from Handelshögskolan i Stockholm/Institutionen för redovisning och finansiering

Abstract: We investigate whether socially responsible mutual funds attempt to make positive changes when casting proxy votes of their portfolio firms. Our data covers 232,680 voting decisions made by 41 socially responsible mutual funds voted on between July 2011 and June 2016. We find that the "genuine" socially responsible mutual funds are more likely to vote affirmatively to social and environmental proposals, while the "so-called" socially responsible mutual funds vote against most social and environmental issues. We also test linkage between prior socially responsible mutual funds' voting and their consequent exit, and find that the "genuine" socially responsible mutual funds voice their dissatisfaction through proxy voting before exit. We also show that socially responsible mutual funds' exit is associated with firm financial performance.

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