SEM217: Adair Morse, Haas School of Business: A Popularity Asset Pricing Model

Tuesday, February 14th @ 11:00-12:30 PM (639 Evans Hall)

A Popularity Asset Pricing Model

Adair Morse, Haas School of Business

We study investments in impact funds, defined as venture capital or growth equity funds with dual objectives of generating financial returns and positive externalities. Being an impact fund elevates a fund’s marginal investment rate by 14.1% relative to a traditional VC fund, even more for funds focused on environmental, poverty, and minority/women issues. Europeans and UNPRI signatories have sharply higher demand for impact. Three investor attributes – household-backed capital, mission-oriented investors, and investors facing political/regulatory pressure to invest in impact – account for the higher impact demand. In contrast, legal restrictions against impact (e.g., ERISA) hinder 25% of total demand.