Investors’ Aspirations toward Social Impact: A Portfolio-Based Analysis

Sustainability, Forthcoming

20 Pages Posted: 14 May 2021

See all articles by Leonardo Boni

Leonardo Boni

Polytechnic University of Milan

Laura Toschi

University of Bologna - Department of Management

Riccardo Fini

University of Bologna - Department of Management; Imperial College London

Date Written: May 12, 2021

Abstract

In the last ten years, we have witnessed a proliferation of investors claiming blended value strat-egies, i.e., pursuing both economic and social returns in their investments. Aside from this rush for self-selecting in a blended value finance context, we still do not know to what extent the investors’ claims actually reflect investment decisions. Evidence suggests that, in some cases, such investors tend to maximize the social performance over the financial performance; in some others, the effect is reverted, but literature currently lacks studies aligning the analysis of the investment decisions with the investment portfolios. Yet, it is still unclear whether blended value investment decisions are enacted as a result of investors’ deliberate strategies and what influences this relationship. In this paper we tackle this issue, analyzing the extent to which investors’ finance firms pursuing goals aligned with their strategic aspirations. Specifically, adopting a Fractional Logistic Re-gression model, we test the effect of investors’ aspirations toward social impact on the extent to which their investees (i.e., the portfolio of firms in which they invest) pursue social returns. Results suggest the existence of a positive and significant investor–portfolio alignment effect (i.e., the higher the investors’ aspirations toward social impact, the higher the number of investees with higher social aspirations). Yet, this effect is influenced by contingencies at both investor and port-folio levels. Investors with strong aspirations toward social impact that: (i) invest in countries with high levels of social inequality, and (ii) are located in countries that support social progress and maximize, in their portfolios, the presence of businesses pursuing social impact. We discuss implications for future researchers, policymakers and practitioners.

Keywords: Impact investing, Blended value, Alignment, Aspirations

JEL Classification: O00

Suggested Citation

Boni, Leonardo and Toschi, Laura and Fini, Riccardo, Investors’ Aspirations toward Social Impact: A Portfolio-Based Analysis (May 12, 2021). Sustainability, Forthcoming , Available at SSRN: https://ssrn.com/abstract=3844522 or http://dx.doi.org/10.2139/ssrn.3844522

Leonardo Boni

Polytechnic University of Milan ( email )

Piazza Leonardo da Vinci
Milan, Milano 20100
Italy

Laura Toschi

University of Bologna - Department of Management ( email )

Via Capo di Lucca, 34
40126 Bologna
Italy
00390512090214 (Phone)

Riccardo Fini (Contact Author)

University of Bologna - Department of Management ( email )

Via Terracini 28
Bologna, 40131
Italy

HOME PAGE: http://www.unibo.it/faculty/riccardo.fini

Imperial College London ( email )

South Kensington Campus
London SW7 2AZ, DC
United Kingdom

HOME PAGE: http://www3.imperial.ac.uk/people/r.fini

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