Work

Revenue alignment with the EU taxonomy regulation in developed markets

Year: 2024

Type: article

Abstract: This article provides first evidence on the capital market effects of the EU Taxonomy Regulation (TR). The TR introduced a new classification scheme to identify companies with environmentally sustainable economic activities. The results offer support for a significant estimated TR alignment premium, compatible with the interpretation that investors already apply the TR and allocate capital to TR-aligned companies. This effect strengthens with an increase in investor attention. We also find significant cross-sectional variation in abnormal stock returns surrounding the publication date of the TR conditional on the degree of estimated TR alignment. Traditional ESG ratings cannot explain the TR premium.

Source: Journal of Banking & Finance

DOI: 10.1016/j.jbankfin.2024.107339

Authors: Alexander Bassen, Othar Kordsachia, Kerstin Lopatta, Weiqiang Tan

Institutions: Universität Hamburg, University of Liechtenstein, Education University of Hong Kong

Language: English

Topic: Sustainable Finance and Green Bonds

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: hybrid

Estimated APC paid: $3,240

OpenAlex ID: W4404549338

FWCI: 10.03

Cites: 53

Cited by: 29

Related to: 10