Mutual fund investment and corporate social responsibility: evidence from Korea

ABSTRACT

This paper examines the monitoring role of mutual funds by empirically testing whether mutual fund investment enhances firms’ corporate social responsibility (CSR) performance. Using Korean public companies as a sample, we find that firms’ CSR performance, measured by Korea Economic Justice Institute (KEJI) index scores, increases as they receive investments from mutual funds. Further analysis also shows that there exists a strong association between mutual fund investments and their contribution to society. We confirm that these results are robust to different specifications of research design and after controlling for chaebol affiliation.

KEYWORDS:

• Mutual funds
• corporate social responsibility
• coporate governance
• monitoring

JEL CLASSIFICATION:

• G30
• G20

Acknowledgments

This work was supported by the Ministry of Education of the Republic of Korea and the National Research Foundation of Korea (NRF-2019S1A5A8032207). This work was supported by Hankuk University of Foreign Studies Research Fund.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

This work was supported by the the Ministry of Education of the Republic of Korea and the National Research Foundation of Korea [NRF-2019S1A5A8032207];Hankuk University of Foreign Studies Research Fund;