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On ESG Investing: Heterogeneous Preferences, Information, and Asset Prices / Itay Goldstein, Alexandr Kopytov, Lin Shen, Haotian Xiang.
- Format:
- Book
- Author/Creator:
- Goldstein, Itay.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w29839.
- NBER working paper series no. w29839
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2022.
- Summary:
- We study how environmental, social and governance (ESG) investing reshapes information aggregation by prices. We develop a rational expectations equilibrium model in which traditional and green investors are informed about financial and ESG risks but have different preferences over them. Because of the preference heterogeneity, traditional and green investors trade in the opposite directions based on the same information. We show that the equilibrium price may not be uniquely determined. An increase in the fraction of green investors and an improvement in the ESG information quality can reduce price informativeness about the financial payoff and raise the cost of capital.
- Notes:
- Print version record
- April 2022.
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