The Impact of Socially Conscious Funds on the Behaviors of Portfolio Firms: Evidence from Hedge Fund Activism

Ph.D. Candidate Jonghyuk Bae of Accounting Department will be defending his Dissertation Proposal titled, “The Impact of Socially Conscious Funds on the Behaviors of Portfolio Firms: Evidence from Hedge Fund Activism” on 10/23/2020.

The time and location of his proposal defense is 9:00 am – 10:30 am (ZOOM)

Abstract: This paper examines the impact of hedge funds’ corporate social responsibility (CSR) preferences on the behaviors of their portfolio firms. Despite the growing interest in CSR issues among hedge funds, the question of whether hedge funds’ CSR preferences influences the behaviors of their portfolio firms remains unanswered. In this study, I classify hedge funds based on their CSR preferences and find that, compared to non-socially responsible funds, socially responsible funds campaigns are related to increase in the target firms’ CSR performance. Further analyses show that socially responsible funds campaigns are associated with improvements in the target firms’ corporate governance, financial reporting quality, and operating performance. These findings contribute to the literature on hedge fund activism and are consistent with the notion that socially responsible funds enhance shareholder value for the target firms.

Many thanks to Jonghyuk’s dissertation committee: • Committee Chair: Hsihui Chang – Professor – Drexel University • Committee Co-Chair: Xin Dai - Assistant Professor – Drexel University • Committee Member: Anthony Curatola - Professor- Drexel University • Committee Member: Barbara Grein - Professor – Drexel University • Committee Member: Rajiv Nag - Assistant Clinical Professor – Drexel University