Systemic signalling: the application of signalling theory to the ESG rating space

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Chapter 5 in ESG Rating Agencies and Financial Regulation, 2024, pp 125-142 from Edward Elgar Publishing

Abstract: This chapter brings the book to its climax, where we learn finally the underlying answers to all the questions that have come before this chapter. The mountain of investor and issuer pressure, which has been supported by researchers, has resulted in an array of regulatory responses around the world, with it remaining to be seen whether such regulatory initiatives will have the effect that the marketplace requires. This chapter explains that there is one thing and one thing only that will provide the marketplace with what it needs as far as ESG ratings are concerned, and we need not look further than the credit rating industry for an example of what that is. An investor-driven ‘natural oligopoly’ is slowly being formed, and this chapter explains in detail why: so that signals can be sent and received, efficiently and effectively.

Keywords: Economics and Finance; Law - Academic; Politics and Public Policy (search for similar items in EconPapers)
Date: 2024
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