How do the size and independence of the board of trustees affect the financial and sustainable performance of socially responsible mutual funds?

Muñoz, Fernando

doi:10.1002/csr.1930

Cited by 12 publications

(8 citation statements)

References 61 publications

(108 reference statements)

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“…Adams et al. (2018) and Muñoz (2020) also found a negative and significant relationship between the age of the fund and its financial performance. The positive effect of the fund's size could be explained by the existence of economies of scale, as documented by Latzko (1999).…”

Section: Empirical Findingsmentioning

confidence: 89%

Sin sectors and negative screening

Muñoz

2021

Business Ethics Env & Resp

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In this research, I analyse how exposure to sin sectors impacts the financial performance of socially responsible (SR) funds. I also analyse the question of whether or not these funds keep their word and are less exposed to the controversial sectors that they claim to exclude in their prospectuses. Additionally, I analyse how local political and religious factors exert an influence on the exposure of SR funds to sin sectors. Consequently, I analyse a sample comprising 136 SR mutual funds that were domiciled in the U.S. market in the period March 2017-April 2020 and who invest in domestic and global equity, of which 92 implement negative screens on at least 1 of 12 controversial activities. My results show that for seven (three) of the controversial sectors that were analysed, the exposure of SR funds to these sectors jeopardises (improves) their financial performance. Furthermore, SR mutual funds who perform negative screens tend to live up to their name and are less exposed to the sector/s that they claim to exclude. In addition, SR mutual funds managed by companies located in Democrat-leaning states are less exposed to sin sectors, and that the effect of local religiosity depends on the specific sector analysed.

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Section: Empirical Findingsmentioning

confidence: 89%

Sin sectors and negative screening

Muñoz

2021

Business Ethics Env & Resp

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“…A recent study by Zubeltzu-Jaka et al (2020) reported that larger boards enable companies to achieve social objectives as stakeholder sensitivities are better represented. On the other hand, Muñoz (2020) reported that board size has negative relationships with corporate social performance. Other researchers, like Cucari et al (2018), found no significant relationship between board size and corporate social activities.…”

Section: Hypothesis Developmentmentioning

confidence: 99%

The Role of Corporate Governance in Achieving SDGs among Malaysian Companies

Buniamin

Jaffar

Ahmad

et al. 2022

EJSD

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While the Sustainable Development Goals (SDGs) agenda is applicable to the member states of the UN, many other players are also involved, such as corporations. The primary and economic value chain activities and aims of major companies mean they will ultimately have a crucial and explicit role to play in enabling the SDGs to be attained. In Malaysia, there have been few studies on firms' engagement in reaching the SDGs. Therefore, the current study aimed to examine the roles played by corporations in enabling SDGs to be attained. A specific analysis was conducted to determine if a company’s participation in the SDGs can be influenced by first-rate corporate governance. The data was collected using content analysis of 87 corporate annual reports of public listed companies from Malaysia. The boards’ independence, size, meeting frequency, and gender diversity were the corporate governance practices examined. An annual report may include details of the company’s role in the SDGs as a proxy for the corporate’s SDG involvement. The findings shed light on the nature of business involvement in the SDGs. The SGD with the most frequent reporting was Goal 8 - Decent work and economic growth, while the SDG with the most frequent reporting was Goal 2 - Zero Hunger. These results indicate that a company’s SDG participation has a positive relationship with certain governance practices of corporations, especially the board meeting frequency. Moreover, these results may serve to emphasise to regulators and policymakers that all corporations require effectual corporate governance so that the challenges facing the world and its population every day can be addressed, leading to an improved and more sustainable future for everyone. Keywords Sustainable Development Goals (SDGs), corporate governance, Malaysia, companies, content analysis

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“…Much of the SR mutual fund literature focusses on comparisons between the financial performance of these funds and conventional funds (Bauer et al, 2005;Signori, 2009;Leite and Cortez, 2014;or Ur Rehman et al, 2016;etc). Other authors have analysed the effect of different approaches to integrating ESG issues into the investment process on the financial performance of SRMFs (Hernaus, 2019;or Muñoz, 2020) or the financial performance of specific subsets of SRMFs (see amongst others Ferruz et al (2012), who analyse religious funds or Muñoz et al (2014), who study environmental funds). Some studies have analysed the financial performance of SRMFs controlling for investment style exposure (Das and Rao, 2013;Leite and Cortez, 2014;or Muñoz et al, 2015;etc); we found no articles examining deviations from these styles and their consequences.…”

Section: Socially Responsible Mutual Funds Literature and Research Hypothesesmentioning

confidence: 99%

Style-changing behaviour in the socially responsible mutual fund industry: consequences on financial and sustainable performance

Muñoz

Vargas

Vicente

2021

SAMPJ

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Purpose This study aims to examine style-deviation practices in the socially responsible mutual funds (SMRF) industry i.e. how mutual funds game their stated financial objectives to earn a higher relative performance ranking. In addition, the consequences of such practices on sustainable scores and money flows are studied. Design/methodology/approach A sample of 454 US equity SRMFs is studied. This paper uses panel regressions controlling for time and style fixed-effects. Findings This study finds that 17.60% of SRMF managers in the sample are engaged in style deviation practices. These practices positively impact the sustainable performance of SRMFs and negatively impact their financial performance. One effect offsets the other and they consequently do not affect money flows. Another finding is that only investors with lower portfolio sustainability scores do show return-chaser behaviour. Practical implications This paper reveals that SRMF managers deviating from their stated financial style face a dilemma that is non-existent for their conventional peers that is style deviation practices affect financial and sustainable performance in opposing ways, whereas SRMF investor utility depends positively on both dimensions. The findings are not conclusive about the effectiveness of style deviation practices in attracting SRMF money flows. Social implications SRMF industry has experienced tremendous growth in the past decade. The increased competition in this industry has led managers to strive to attract investors, sometimes by relying on irregular practices that enhance their portfolio results. Regulators should consider how to avoid such perverse behaviour with a view to improving mutual funds transparency. Originality/value This is the first research that analyses style deviation practices and their consequences for the SRMF industry.

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How do the size and independence of the board of trustees affect the financial and sustainable performance of socially responsible mutual funds?

Cited by 12 publications

References 61 publications

Sin sectors and negative screening

Sin sectors and negative screening

The Role of Corporate Governance in Achieving SDGs among Malaysian Companies

Style-changing behaviour in the socially responsible mutual fund industry: consequences on financial and sustainable performance

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