Winners of 2018 IRRC Institute Research Award Examine Pressing, Big Picture Investor Issues – Impact of Index Funds and Impact of Responsible Investing

Honorable Mention Academic Research Explores Sustainability and Stock Prices

NEW YORK--()--An academic research paper examining the corporate stewardship of index fund managers and a practitioner paper looking at how to measure the amount of sustainable investing in equity portfolios are the winners of the 2018 Investor Responsibility Research Center Institute (IRRCi) annual investor research competition. Each winning research team will share a $10,000 award.

“The two winning research papers make a substantial contribution to understanding big picture, weighty issues for investors and the global economy,” said Jon Lukomnik, IRRCi executive director. “The winning academic paper examines the stewardship of index funds that own an increasingly large proportion of public companies. The winning practitioner research offers an innovative data-driven model to measure the level of sustainable investments in a portfolio. The authors make us think about how investments interact with real world economic activity,” Lukomnik said.

The first winning research paper, Index Funds and the Future of Corporate Governance: Theory, Evidence and Policy, is co-authored by Lucian Bebchuk, James Barr Ames Professor of Law, Economics, and Finance, and Director of the Program on Corporate Governance, Harvard Law School and Scott Hirst, Associate Professor, Boston University School of Law and Research Director, Program on Institutional Investors, Harvard Law School.

This paper studies the resources and decisions of index fund managers – how they monitor, vote and engage with their portfolio companies. This research provides an analytical framework for understanding the incentives of index fund managers, provides the first comprehensive and detailed empirical account of the full range of stewardship activities that index fund managers do and do not undertake, and considers the significant policy implications of the issues analyzed. Download the research here.

“We are honored to have our work recognized by the IRRC Institute,” said report co-author Lucian Bebchuk.

“Our work aims to highlight a key dimension of our corporate governance system that deserves the close attention of policymakers and market participants,” said report co-author Scott Hirst.

The second winning paper, Measuring the Sustainability Impact of 25 European ESG Funds, is co-authored by Larry Abele and Antti Savilaakso, both with Auriel Investors.

This research introduces a new quantitative data-driven model to measure the level of sustainable investments in a portfolio as compared against a benchmark by creating a measure called “active ESG (environmental, social and governance) share” intended to quantify the impact of sustainability considerations on the portfolio’s holdings. The research then compares the active ESG share of 25 diversified European ESG funds. It finds that these funds prioritize the provision of environmentally and socially positive products and services by their portfolio companies, but have lower board independence, gender equality and social impacts than their benchmark. In general, the funds had an active ESG share of only four to five percent, meaning that sustainability issues only caused a four to five percent holding differential from a portfolio that did not consider sustainability. Download the research here.

"We built the Impact-Cubed model to push for more accountability in the sustainable and responsible investment community,” said report co-author Antti Savilaakso. “The apparent lack of accountability as demonstrated by our research waters down the potentially transformative power of responsible investments when ESG funds are more green marketing than real changes in how we invest. We are grateful for the recognition from IRRCi, which reassures us that we are making a real and valuable contribution to the industry.”

The research submissions were of such high quality that the judges selected another research paper for Honorable Mention recognition, Are Sustainability Factors Associated with Stock Price Informativeness? This research is authored by Zabihollah Rezaee, Professor, School of Accountancy, University of Memphis. Download the research here.

The blue ribbon panel of judges for the 2018 IRRC Institute Prize were:

  • Robert Dannhauser, Head of Capital Markets Policy, CFA Institute
  • James Hawley, Professor emeritus and former Director of the Elfenworks Center for Fiduciary Capitalism at St. Mary’s College of California
  • Erika Karp, Founder, CEO and Chair of the Board of Cornerstone Capital
  • Nell Minow, Governance Expert and Huffington Post Columnist

Biographies of the judges are available here. Information on past winners is available here. More information about the award is available here. Read the full body of IRRCi research here.

The IRRCi is scheduled to dissolve by December 31, 2018. The John L. Weinberg Center for Corporate Governance at the University of Delaware will take over the award beginning in 2019, as well as sustain access to the full body of IRRCi research.

The Investor Responsibility Research Center Institute is a nonprofit research organization that funds academic and practitioner research enabling investors, policymakers, and other stakeholders to make data-driven decisions. IRRCi research covers a wide range of topics of interest to investors, is objective, unbiased, and disseminated widely. More information is available at


Kelly Kenneally | + |

Release Summary

IRRC Institute announces winners of 2018 investor competition.


Kelly Kenneally | + |