European Investors and Sustainability: A Natural Experiment Examining European Mutual Fund Flows and Sustainability Ratings
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School of Business |
Bachelor's thesis
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Date
2019
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Mcode
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Rahoitus
Language
en
Pages
23
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Abstract
In this study, I explore a large shock to European mutual fund markets, which resulted in a total €4,5 billion net inflows to funds categorized as high sustainability and €10 billion outflows from funds categorized as low sustainability. This study provides causal evidence to support the argument that European investors collectively value sustainability, and view sustainability as a positive attribute of a company. The experimental evidence suggests that the main driver of the fund flows into the high sustainability funds is investors’ nonpecuniary motives, such as intrinsic altruism and warm-glow. The results also suggest that fund flows may partly be driven by mutual funds’ performance expectations, though I have no clear evidence whether these expectations are rational or naive. Institutional constraints and institutions’ presence at the markets do not have significant effects on the results.Description
Thesis advisor
Shin, SeanKeywords
Sustainability, Sustainable Investing, Investor Behavior, Fund Flow Analysis