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Article

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

1
Louvain Finance (LFIN), University Catholic of Louvain, B-1348 Louvain-la-Neuve, Belgium
2
Aix-Marseille School of Economics (AMSE), Aix-Marseille University, 13001 Marseille, France
3
Laboratoire d’Économie d’Orléans (LEO), University of Orléans, 45100 Orléans, France
*
Author to whom correspondence should be addressed.
Academic Editor: Mogens Steffensen
Risks 2021, 9(11), 199; https://doi.org/10.3390/risks9110199
Received: 24 September 2021 / Revised: 1 November 2021 / Accepted: 2 November 2021 / Published: 5 November 2021
(This article belongs to the Special Issue Risks: Feature Papers 2021)
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. View Full-Text
Keywords: socially responsible investing (SRI); environmental, social and governance (ESG); asymmetric information; regulation socially responsible investing (SRI); environmental, social and governance (ESG); asymmetric information; regulation
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MDPI and ACS Style

Candelon, B.; Hasse, J.-B.; Lajaunie, Q. ESG-Washing in the Mutual Funds Industry? From Information Asymmetry to Regulation. Risks 2021, 9, 199. https://doi.org/10.3390/risks9110199

AMA Style

Candelon B, Hasse J-B, Lajaunie Q. ESG-Washing in the Mutual Funds Industry? From Information Asymmetry to Regulation. Risks. 2021; 9(11):199. https://doi.org/10.3390/risks9110199

Chicago/Turabian Style

Candelon, Bertrand, Jean-Baptiste Hasse, and Quentin Lajaunie. 2021. "ESG-Washing in the Mutual Funds Industry? From Information Asymmetry to Regulation" Risks 9, no. 11: 199. https://doi.org/10.3390/risks9110199

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