The Sustainable Finance Disclosure Regulation: Voluntary Signaling or Mandatory Disclosure?

Lara Spaans, Jeroen Derwall, Joop Huij and Kees Koedijk

No 18881, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We study the consequences of mandatory sustainable finance disclosure regulation (SFDR) for the money flows and investment behavior of mutual funds. We find that EU-regulated funds significantly improve the ESG profile of their investments relative to US mutual funds, holding for both the retail and the institutional funds. Taken together, we find that SFDR enables mutual funds to attract capital by signaling comitments to sustainable investments.

Keywords: Mandatory disclosure; Signaling; Investor preferences; Mutual funds; Sustainable finance (search for similar items in EconPapers)
JEL-codes: G11 G15 G23 Q58 (search for similar items in EconPapers)
Date: 2024-03
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