ESG-Washing in the Mutual Funds Industry? From Information Asymmetry to Regulation

Bertrand Candelon, Jean-Baptiste Hasse and Quentin Lajaunie
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Quentin Lajaunie: LEO - Laboratoire d'Économie d'Orleans - UO - Université d'Orléans - UT - Université de Tours

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Abstract: In this paper, we study the asymmetric information between asset managers and investors in the socially responsible investment (SRI) market. Specifically, we investigate the lack of transparency of the extra-financial information communicated by asset managers. Using a unique international panel dataset of approximately 1500 equity mutual funds, we provide empirical evidence that some asset managers portray themselves as socially responsible yet do not make tangible investment decisions. Furthermore, our results indicate that the financial performance of mutual funds is not related to asset managers' signals but should be evaluated relatively using extra-financial ratings. In summary, our findings advocate for a unified regulation framework that constrains asset managers' communication.

Date: 2021-11
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Published in Risks, 2021, 9 (11), pp.199. ⟨10.3390/risks9110199⟩

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Journal Article: ESG-Washing in the Mutual Funds Industry? From Information Asymmetry to Regulation (2021)
Working Paper: ESG-Washing in the Mutual Funds Industry? From Information Asymmetry to Regulation (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03557793

DOI: 10.3390/risks9110199

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