BibTex format
@article{Bolton:2026,
author = {Bolton, P and Eskildsen, M and Kacperczyk, M},
journal = {Journal of Financial Economics},
title = {Carbon home bias},
year = {2026}
}
RIS format (EndNote, RefMan)
TY - JOUR
AB - Institutional investors apply stricter carbon screens abroad than at home. Using global equity holdings for roughly 13,400 institutions across 48 countries over 2005–2024, we show that higher firm emissions predict lower foreign institutional ownership with no corresponding reduction at home; the domestic-foreign ownership gap widens with emissions, and domestic ownership rises with Scope 3 emissions. This carbon home bias remains in within-investor and within-firm comparisons and is not explained by the countrypair determinants of ordinary home bias. It operates through both re-entry (foreign high emitters face a higher hurdle to re-enter a portfolio) and exit (a higher hazard of leaving it). This bias intensified after the Paris Agreement and did not unwind during the subsequent anti-ESG reaction. It is concentrated in discretionary rather than index-constrained holdings; at the extensive margin, the incremental bias is largest among pension funds—institutions particularly associated with formal investment-policy restrictions, and better covered by European than by U.S. filings—rather than among managers best placed to exploit an informational advantage. Overall, the evidence is more consistent with institutional constraints and screening policies than with a simple information-advantage explanation.
AU - Bolton,P
AU - Eskildsen,M
AU - Kacperczyk,M
PY - 2026///
SN - 0304-405X
TI - Carbon home bias
T2 - Journal of Financial Economics
ER -