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Journal of Banking & Finance Vol. 170 2025

Revenue alignment with the EU taxonomy regulation in developed markets

Alexander Bassen1,2,3; Othar Kordsachia4; Kerstin Lopatta1,2,3; Weiqiang Tan5

1 Universität Hamburg · 2 Hamburg School of Business Administration · 3 HAW Hamburg · 4 University of Liechtenstein · 5 Education University of Hong Kong

open access

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.

DOI
10.1016/j.jbankfin.2024.107339
Volume
170
Pages
107339
Language
en
Sources
openalex crossref bibtex:phds-export.bib

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