Value similarity and overall performance: trust in responsible investment

Abstract

International audiencePurpose: The research shows how overall performance can help foster trust in financial institutions. While a climate of is trust amongst investors and the general public towards financial institutions is since recent turmoils on the financial markets, we believe that mutual funds adopting overall performance can help recover a climate of trust due to the implied balance between economic, social and environmental performance. More specifically, overall performance promotes values that are similar to investors’ values and could be used by responsible investment funds if they want to contribute to the restoration of trust in investment funds.Method: Using an innovative, experimental design, we test the effect of value similarity on the trust that investors have in the investment fund. This effect cannot be studied in isolation, which is why we compare it with the effects offinancial performance and ethical labelling on trust.Findings: We find that funds with similar values are perceived as more trustworthy by investors. Consequently, overall performance should be added to a fund managers toolbox if she wants to foster trust in her fund. The effect of financial performance on trust applies only when the investor has no other information regarding the fund. As for the ethical labelling of funds, it has no effect on trust. Research implications: Our findings encourage research that aims to develop acomprehensive approach of integrated overall performance focusing on financial and extra financial values. Bonnet et al. (2016) field work on socio-economic management and Naro & Travaillé (2016) work on management controllersprovide promising examples in this regard.Practical implications: Investment funds can acquire an edge by communicating on overall performance and the specific values of their target investors. Merely labeling funds as ethical is not sufficient to increase trust.Social implications: Increasing similarity in values to investors and adopting overall performance in investment funds will increase investors trust. Trust contributes to social capital and allows societies to create flexible large scale businesses needed to be competitive in a global environment.Originality: Using an innovative experimental methodology we show that the underlying factor of overall performance on trust in investment funds is valuesimilarity. We provide researchers and practitioners with insight about the underlying mechanisms of the effect of overall performance on trust

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