Do ethical and conventional mutual fund managers show different risk-taking behavior?

This paper analyses the risk-taking behavior of a fund manager in response to prior performance by conducting a comparative analysis between ethical and conventional investment portfolios.We examine the influence on managerial risk taking of the compensation and employment incentives. Our analysis looks at the British and Italian markets. We find differences in behavior between the two groups, with ethical investment portfolios managers enjoying greater freedom for shifting the risk taken. We can also see a greater influence of employment incentives in risk decision taking with respect to the managers of conventional investment portfolios. The results we have obtained are very similar for both the British and Italian markets. © 2009 Asociación Española de Finanzas. Published by Elsevier España, S.L. All rights reserved.