Impact investing

Abstract

nber working paper series impact investing brad m. barber adair morse ayako yasuda working paper 26582 www.nber.org/papers/w26582 national bureau of economic research 1050 massachusetts avenue cambridge, ma 02138 december 2019 the views expressed herein are those of the authors and do not necessarily reflect the views of the national bureau of economic research. brad barber is on the advisory board of vert asset management and was co-principal investigator for the calpers sustainable investment research initiative grant. nber working papers are circulated for discussion and comment purposes. they have not been peer-reviewed or been subject to the review by the nber board of directors that accompanies official nber publications. © 2019 by brad m. barber, adair morse, and ayako yasuda. all rights reserved. short sections of text, not to exceed two paragraphs, may be quoted without explicit permission provided that full credit, including © notice, is given to the source. impact investing brad m. barber, adair morse, and ayako yasuda nber working paper no. 26582 december 2019 jel no. a13,g11,g23,g24,g41,z1 abstract we document that investors derive nonpecuniary utility from investing in dual-objective vc funds, thus sacrificing returns. impact funds earn 4.7 percentage points (ppts) lower irrs ex post than traditional vc funds. in random utility/willingness-to-pay (wtp) models investors accept 2.5-3.7 ppts lower irrs ex ante for impact funds. the positive wtp result is robust to …

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