Do Investors Value Sustainability? A Natural Experiment Examining Ranking and Fund Flows

ArXiv ID: ssrn-3016092 “View on arXiv”

Authors: Unknown

Abstract

Examining a shock to the salience of the sustainability of the US mutual fund market, we present causal evidence that investors marketwide value sustainability.

Keywords: Sustainability, Mutual funds, Investor preferences, Fund flows, ESG investing

Complexity vs Empirical Score

• Math Complexity: 2.5/10
• Empirical Rigor: 8.0/10
• Quadrant: Street Traders
• Why: The paper relies on econometric analysis (difference-in-differences, local linear plots, fixed effects) rather than advanced mathematics, but is exceptionally data-heavy, using a large-scale natural experiment on $8 trillion in assets with precise flow measurements and experimental validation.

  flowchart TD
    A["Research Goal:<br>Do investors value sustainability?"] --> B["Methodology:<br>Natural experiment from sustainability ranking shock"]
    B --> C["Data/Inputs:<br>US mutual fund flows & sustainability scores"]
    C --> D["Computation:<br>Difference-in-differences analysis"]
    D --> E["Key Findings:<br>Investors increase flows to<br>higher sustainability funds post-shock"]