The ESG Gap

In recent years, demand for companies to promote environmental, social, and governance (“ESG”) values has increased dramatically. Investment in ESG-oriented mutual funds (green funds), rose globally by 53 percent in 2021 to $2.7 trillion (Kishan, 2022). Bloomberg forecasts that by 2025 ESG assets may hit $53 trillion – a third of global assets under management. Not only are people investing more in ESG, but they are willing to pay higher fees for such investments. A recent study found that investors are willing, on average, to pay 20 basis points more for an investment in a fund with an … Read more

SPACtivism

SPACs are on fire. Scholars and commentators have pointed out  the flaws of SPACs, including the various agency problems they generate (Klausner 2021), and their utilization by sophisticated investors to take advantage of unsophisticated investors (Spamann, 2021). These claims are supported by the under-performance of SPACs relative to market benchmarks, which reached a negative gap of 15 percent during 2021 (Randewich, 2021).

In a new essay, we suggest a modification to the SPAC that would enable its transformation from an investment vehicle that disrupts capital markets to one that may enhance their integrity … Read more