Journal article

Authors list: Bofinger, Yannik; Heyden, Kim J.; Rock, Björn; Bannier, Christina E.

Publication year: 2022

Journal: Finance Research Letters

Volume number: 45

ISSN: 1544-6123

eISSN: 1544-6131

DOI Link: https://doi.org/10.1016/j.frl.2021.102160

Publisher: Elsevier

Abstract: 
This study examines the relation between a fund's environmental, social and governance (ESG) rating and active fund investment skill. We find that higher ESG ratings are associated not only with higher overpricing in the fund. Rather, higher sustainability of the fund also leads to higher overpricing in the fund even relative to its benchmark. Pursuing higher fund sustainability hence leads to active fund overpricing which is typically interpreted as low investment skill.

Harvard Citation style: Bofinger, Y., Heyden, K., Rock, B. and Bannier, C. (2022) The sustainability trap: Active fund managers between ESG investing and fund overpricing, Finance Research Letters, 45, Article 102160. https://doi.org/10.1016/j.frl.2021.102160

APA Citation style: Bofinger, Y., Heyden, K., Rock, B., & Bannier, C. (2022). The sustainability trap: Active fund managers between ESG investing and fund overpricing. Finance Research Letters. 45, Article 102160. https://doi.org/10.1016/j.frl.2021.102160