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Asymmetric market responses to sustainability-related regulatory changes: Evidence from the European Union's Omnibus simplification package

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  • Kumari, Vineeta
  • AlDaas, Muhammad

Abstract

This study examines the market reactions to the Omnibus Simplification Package (OSP). The OSP simplifies existing sustainability and environmental legislation for businesses in the European Union (EU). Using an event study methodology, we analyze whether regulatory simplification triggers short-term asymmetries due to market uncertainty. In particular, this study addresses three research questions: (1) How do abnormal returns and volatility respond to the OSP's announcement? (2) Are market reactions asymmetric across developed and emerging economies? (3) How does prior regulatory alignment influence investor responses? The findings reveal significant initial negative returns and heightened volatility, followed by a partial recovery. Developed EU markets exhibit milder reactions than emerging economies, and countries with prior Corporate Sustainability Reporting Directive (CSRD) adoption tend to react more negatively.

Suggested Citation

  • Kumari, Vineeta & AlDaas, Muhammad, 2026. "Asymmetric market responses to sustainability-related regulatory changes: Evidence from the European Union's Omnibus simplification package," The Journal of Economic Asymmetries, Elsevier, vol. 33(C).
    • Handle: RePEc:eee:joecas:v:33:y:2026:i:c:s1703494926000034
    DOI: 10.1016/j.jeca.2026.e00451
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