Arbeitspapier
Sustainable investing and public goods provision
We model investors that take into account the amount of public good that firms produce (e.g., by reducing carbon emissions) when making their portfolio allocation. In an equilibrium asset pricing model with production and public goods provision, we find that environmentally conscious investors invest more than others, invest more in clean firms, and may invest more in dirty firms. Whether clean firms exhibit CAPM alphas depends on the amount of systematic risk of the firm and its relative contribution to the public good. There is underprovision of the public good in equilibrium. Lower government provision may lead to a surge in investment and government provision may be dominated by green subsidies. Finally, we extend the model to analyze negative externalities, donations, and uncertainty regarding public good provision.
- Language
-
Englisch
- Bibliographic citation
-
Series: Working Paper ; No. 969
- Classification
-
Wirtschaft
Portfolio Choice; Investment Decisions
Asset Pricing; Trading Volume; Bond Interest Rates
Public Goods
- Subject
-
Sustainable finance
ESG investing
public good provision
asset pricing
- Event
-
Geistige Schöpfung
- (who)
-
Piatti, Ilaria
Shapiro, Joel Andrew
Wang, Xuan
- Event
-
Veröffentlichung
- (who)
-
Queen Mary University of London, School of Economics and Finance
- (where)
-
London
- (when)
-
2023
- Handle
- Last update
-
10.03.2025, 11:45 AM CET
Data provider
This object is provided by:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Piatti, Ilaria
- Shapiro, Joel Andrew
- Wang, Xuan
- Queen Mary University of London, School of Economics and Finance
Time of origin
- 2023
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