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Revenue alignment with the EU taxonomy regulation in developed markets

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  • Bassen, Alexander
  • Kordsachia, Othar
  • Lopatta, Kerstin
  • Tan, Weiqiang

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.

Suggested Citation

  • Bassen, Alexander & Kordsachia, Othar & Lopatta, Kerstin & Tan, Weiqiang, 2025. "Revenue alignment with the EU taxonomy regulation in developed markets," Journal of Banking & Finance, Elsevier, vol. 170(C).
    • Handle: RePEc:eee:jbfina:v:170:y:2025:i:c:s037842662400253x
    DOI: 10.1016/j.jbankfin.2024.107339
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    More about this item

    Keywords

    Corporate Social Responsibility; EU Taxonomy Regulation; Green Assets; Stock Returns;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

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