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New research on investing from Harvard Business School faculty on issues including institutional investing, foreign direct investment, and investment activism.
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As Climate Fears Mount, More Investors Turn to 'ESG' Funds Despite Few Rules

by Rachel Layne

Regulations and ratings remain murky, but that's not deterring climate-conscious investors from paying more for funds with an ESG label. Research by Mark Egan and Malcolm Baker sizes up the premium these funds command. Is it time for more standards in impact investing?

ESG Activists Met the Moment at ExxonMobil, But Did They Succeed?

by Lane Lambert

Engine No. 1, a small hedge fund on a mission to confront climate change, managed to do the impossible: Get dissident members on ExxonMobil's board. But lasting social impact has proved more elusive. Case studies by Mark Kramer, Shawn Cole, and Vikram Gandhi look at the complexities of shareholder activism.

Larry Fink at BlackRock: Linking Purpose to Profit

Re: George Serafeim

In 2014, Larry Fink started writing letters to the leaders of some of the largest publicly listed companies, urging them to consider the importance of environmental, social, and governance (ESG) issues. Fink is the chairman and CEO of BlackRock, one of the largest asset management houses in the world. The firm’s success was rooted in its cost-effective, passive investment products that rely more on tracking indices and funds. But Fink wanted his firm to engage with the companies in which they invest and hold them accountable for their social and environmental impacts. What role should investors play in urging business leaders to take environmental, social, and governance issues more seriously and enforcing compliance? Harvard Business School professor George Serafeim discusses the merits of Fink’s approach, the importance of corporate investments in ESG themes, and how to lead a company driven by purpose and profit in his case, “BlackRock: Linking Purpose to Profit,” and his new book Purpose and Profit: How Business Can Lift Up The World.

Did Pandemic Stimulus Funds Spur the Rise of 'Meme Stocks'?

by Rachel Layne

Remember the GameStop stock frenzy? Research by Robin Greenwood and colleagues shows how market speculation can flare up when you combine stimulus funds, trading platforms, and plain old boredom.

After the 'Crypto Crash,' What's Next for Digital Currencies?

by Christina Pazzanese, Harvard Gazette

After soaring to dizzying levels, Bitcoin and other cryptocurrencies have lost more than half of their value in recent months. Scott Duke Kominers discusses crypto's volatility, potential for regulation, and why these digital assets are likely here to stay.

Fencing Off Silicon Valley: Cross-Border Venture Capital and Technology Spillovers

by Ufuk Akcigit, Sina T. Ates, Josh Lerner, Richard Townsend, and Yulia Zhestkova

This study of foreign corporate investment transactions from 32 countries between 1976 and 2015 finds these investments pose a trade-off: While they support young firms in pursuing innovations they could not otherwise afford, they also generate knowledge for the foreign investors.

Best Ideas

by Miguel Antón, Randolph B. Cohen, and Christopher Polk

The “best ideas” in investment managers’ portfolios generate statistically and economically significant risk-adjusted returns over time, and they systematically outperform other positions in the portfolios. Investors can gain substantially if managers choose less-diversified portfolios that tilt more towards their best ideas.

Why Investors Often Lose When They Sue Their Financial Adviser

by Danielle Kost

Forty percent of American investors rely on financial advisers, but the COVID-19 market rollercoaster may have highlighted a weakness when disputes arise. The system favors the financial industry, says Mark Egan. Open for comment; 0 Comments.

Two Case Studies on the Financing of Forest Conservation

by Andrew Baxter, Connor Cash, Josh Lerner, and Ratnika Prasad

Case studies about The Conservation Fund and Sonen Capital highlight three broad lessons about fresh approaches to the ownership and management of forestland.

Market Investors Pay More for Resilient Companies

by Kristen Senz

During a market collapse, investors will pay up for companies considered resilient in their response, according to George Serafeim. Open for comment; 0 Comments.

Corporate Resilience and Response During COVID-19

by Alex Cheema-Fox, Bridget LaPerla, George Serafeim, and Hui (Stacie) Wang

Investors look for evidence during a market crisis that a company is resilient. This study includes findings that challenge the notion that companies need to adopt practices that hurt their employees because investors want them to do so.

How Anchor Investors Help Impact Funds Succeed

by Sean Silverthorne

3Questions A startup fund's ability to attract a major first investor is a signal to others that the investment pool is just fine for entering. Shawn Cole and Rob Zochowski answer questions about anchor investors. Open for comment; 0 Comments.

How Social Entrepreneurs Can Increase Their Investment Impact

by Rachel Layne

Grants or investments? Philanthropic organizations have multiple funding tools available, but choosing the wrong one can dilute the benefits, according to research by Benjamin N. Roth. Open for comment; 0 Comments.

Impact Investing: A Theory of Financing Social Entrepreneurship

by Benjamin N. Roth

The author provides a formal definition of organizational sustainability and characterizes the situations in which a social enterprise should be sustainable. The analysis then delineates when an investment in a social enterprise delivers superior impact to a grant.

A Preliminary Framework for Product Impact-Weighted Accounts

by George Serafeim, Katie Trinh, and Robert Zochowski

Although there is growing interest in environmental, social, and governance measurement, the impact of company operations is emphasized over product use. A framework like this one that captures a product’s reach, accessibility, quality, optionality, environmental use emissions, and end of life recyclability allows for a systematic methodology that can be applied to companies across many industries.

Why CalSTRS Chooses to Engage with the Gun Industry

Should large institutional investors divest or engage if they have an issue with a company? In a recent case study, Vikram Gandhi discusses how CalSTRS, the $200 billion pension plan for California public school teachers, chose to engage with gun makers and retailers. Open for comment; 0 Comments.

Shareholder Activism and Firms’ Voluntary Disclosure of Climate Change Risks

by Caroline Flammer, Michael W. Toffel, and Kala Viswanathan

Shareholder resolutions typically fail, and often by a wide margin. So why do active investors bother? It turns out that resolutions nonetheless can influence corporate transparency. Specifically, after being targeted with shareholder resolutions on environmental topics, this research shows that companies are more likely to publicly disclose their climate change risks—and that such disclosure increases these companies’ valuation.

Decarbonization Factors

by Alex Cheema-Fox, Bridget LaPerla, George Serafeim, David Turkington, and Hui (Stacie) Wang

This paper contributes to a growing knowledge base about how climate change impacts investor expectations, capital allocations and thereby pricing and returns. It provides actionable insights into how to decarbonize portfolios and evaluate the likely performance and carbon exposure differences across strategies.

Should a Pension Fund Try to Change the World?

Re: Rebecca M. Henderson & George Serafeim

Can inclusivity, sustainability, and better governance boost economies? Rebecca Henderson and George Serafeim discuss the impact investing efforts of GPIF, Japan’s government pension fund. Open for comment; 0 Comments.

Going Digital: Implications for Firm Value and Performance

by Wilbur Chen and Suraj Srinivasan

More and more nontechnology companies are adopting digital technologies like AI, data analytics, and machine learning. This study of the economic performance of nontech firms adopting new digital technologies finds a persistent future increase in valuation. However, investors only slowly incorporate the value implications of digital activities into prices. Nontech companies with senior executives with tech talent improve performance more than those without.