Sustainability or performance? Ratings and fund managers' incentives

• 成果类型: Article
• 署名作者: Gantchev, Nickolay; Giannetti, Mariassunta; Li, Rachel
• 署名单位: Stockholm School of Economics
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2024.103831
• 发表日期: 2024
• 关键词: sustainability; ESG; Mutual funds; Fund flows; ratings

摘要

We explore how mutual fund managers and investors react when the tradeoff between a fund's sustainability and performance becomes salient. Following the introduction of Morningstar's sustainability ratings (the globe ratings), mutual funds increased their holdings of sustainable stocks to attract flows. Such sustainability-driven trades, however, underperformed, impairing the funds' overall performance. Consequently, a tradeoff between sustainability and performance emerged. In the new equilibrium, the globe ratings do not affect investor flows and funds no longer trade to improve their globe ratings.