Determinants of equity pension plan flows

Ballester, Carmen Pilar Martí

doi:10.4067/s0718-52862014000100004

Cited by 14 publications

(10 citation statements)

References 72 publications

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“…To analyse whether investors/consumers make their purchasing decisions depending on the type of socially responsible behaviour of pension plan managers, we initially propose an OLS specification. As shown in Equation (1), we first specify the plans' flows (FLOW p,t ) as a linear function of the lagged dependent variable, so investors could regularly save a proportion of their monthly earnings in order to complement their retirement pension, which will be provided by the social security system, as commented by Martí-Ballester (2014b) and Benson and Humphrey (2008), and would be reluctant to change plans or funds due to the existence of research costs (Huang et al, 2007;Sirri and Tufano, 1998), the vector X of independent variables for plan p at time t (SPP and APP) and the vector Z of control variables for plan p at time t, which introduces plan characteristics that have been well documented by previous literature, in addition to an error term, which we label µ pt :…”

Section: Methodsmentioning

confidence: 99%

“…Investors who invest in pension plans managed by insurance companies could receive additional services related to their investment, such as providing clients with taxation advice to encourage them to make contributions to their pension plans at the end of the fiscal year in order to benefit from tax benefits unlike the mutual fund industry as shown by Martí-Ballester (2014b). This could increase or decrease the level of cash in the pension funds' portfolios at the end of the year that their managers should adjust to the equity and/or bond investment affecting their management strategy.…”

Section: Institutional Background and Development Of Hypothesesmentioning

confidence: 99%

“…Given that Martí-Ballester (2014b) shows that the legal status of the management company could influence investor behaviour, we include in our model the dummy variable INSURANCE, which takes the value 1 if the company administering the plan is authorized to operate in the insurance field and 0 if not.…”

Section: Control Variablesmentioning

confidence: 99%

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Investor reactions to socially responsible investment

Martí-Ballester

2015

Management Decision

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Purpose – The purpose of this paper is to analyze investor reactions to ethical screening by pension plan managers. Design/methodology/approach – The author presents a sample consisting of data corresponding to 573 pension plans in relation to such aspects as financial performance, inception date, asset size, number of participants, custodial and management fees, and whether their managers adopt ethical screening or give part of their profits to social projects. On this data the author implements the fixed effects panel data model proposed by Vogelsang (2012). Findings – The results obtained indicate that investors/consumers prefer traditional or solidarity pension plans to ethical pension plans. Furthermore, the findings show that ethical investors/consumers are more (less) sensitive to positive (negative) lagged returns than caring and traditional consumers, causing traditional consumers to contribute to pension plans that they already own. Research limitations/implications – The author does not know what types of environmental, social and corporate governance criteria have been adopted by ethical pension plan managers and the weight given to each of these criteria for selecting the stock of the firms in their portfolios that could influence in the investors’ behaviour. Practical implications – The results obtained in the current paper show that investors invest less money in ethical pension plans than in traditional and solidarity pension plans; this could be due to the lack of information for their part. To solve this, management companies could increase the transparency about their corporate social responsibility (CSR) investments to encourage investors to invest in ethical products so these lead to raising CSR standards in companies, and therefore, sustainable development. Social implications – The Spanish socially responsible investment retail market is still at an early phase of development, and regulators should promote it in order to encourage firms to adopt business activities that take into account societal concerns. Originality/value – This paper provides new evidence in a field little analysed. This paper contributes to the existing literature by focusing on examining the behaviour of pension funds investors whose investment time horizon is in the long-term while previous literature focus on analysing behaviour of mutual fund investors whose investment time horizon is in the short/medium term what could cause different investors’ behaviour.

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Section: Methodsmentioning

confidence: 99%

Section: Institutional Background and Development Of Hypothesesmentioning

confidence: 99%

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Investor reactions to socially responsible investment

Martí-Ballester

2015

Management Decision

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“…Thus, most conventional investors use past financial performance to choose mutual funds, trusting that managers who showed themselves to be competent in the past will be able to generate wealth for current or future investors (Berk & Green, 2004). Furthermore, such investors care more about transferring money into funds that performed well in the past than about withdrawing money from poor past performers (Sirri & Tufano, 1998; Ferreira et al, 2012; Martí‐Ballester, 2014).…”

Section: Literature Review and Development Of Hypothesismentioning

confidence: 99%

Examining the behavior of renewable‐energy fund investors

Martí-Ballester

2020

Bus Strat Env

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Mutual fund investors could contribute to sustainable development by encouraging fund managers to channel their savings into the funding of sustainable energy projects adopted by firms. This study examines whether renewable‐energy investors take into account financial and/or nonfinancial factors when making the decision to invest in a specific fund, comparing their investment behavior with that of black‐energy and conventional investors. To this end, we have gathered information about 4,368 mutual funds (76 renewable‐energy funds, 109 black‐energy funds, and 4,183 conventional mutual funds) from January 2007 to December 2017. For this sample, we adopt a panel‐data approach with Petersen's standard errors clustered by fund and year. Our results indicate that renewable‐energy fund investors are less sensitive to past financial performance than are black‐energy and conventional fund investors, indicating that the former derive their utility from nonfinancial attributes whereas black‐energy investors derive their utility from a conditional multiattribute and conventional fund investors derive their utility from financial attributes.

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“…To test for the effect of corporate socially responsible strategy on the financial performance of equity 3 pension plans we take as a dependent variable the annual risk-adjusted financial performance of a given pension plan p in a given month t. Risk-adjusted return is calculated by adopting a multiindex model based on CAPM (Derwall & Koedijk, 2009) that includes a set of indexes representing the types of assets in which Spanish pension plans might invest (Martı´-Ballester, 2014a, 2014b, 2014c:…”

Section: Variablesmentioning

confidence: 99%