Publications
Publications
- 2024
- HBS Working Paper Series
What Do Impact Investors Do Differently?
Abstract
In recent years, impact investors – private investors who seek to generate simultaneously financial and social returns – have attracted intense interest and controversy. We analyze a novel, comprehensive data set of impact and traditional investors to assess how the non-financial characteristics of impact portfolios differ from their traditional counterparts. First, we document that they are more likely to invest in disadvantaged areas and nascent industries and exhibit more risk tolerance and patience. We then examine the degree to which impact investors expand the financing frontier, versus investing in companies that could have attracted traditional private financing. Utilizing a variety of network theoretic and event study analyses, we find limited support for the assertion that impact investors expand the financing frontier, either in the deal-selection stage or the post-investment stage.
Keywords
ESG; Socially Responsible Investing; Investment Decisions; Public Goods; Impact Investment; Investment; Private Equity; Venture Capital
Citation
Cole, Shawn, Leslie Jeng, Josh Lerner, Natalia Rigol, and Benjamin N. Roth. "What Do Impact Investors Do Differently?" Harvard Business School Working Paper, No. 24-028, November 2023. (Revise and Resubmit, Review of Financial Studies.)