Adam Smith Business School

Professor Yong Chen, Mays Business Shool, Texas A&M University.

"The Economics of Greenwashing"

Thursday 30 April 2026. 15:00-16:30 Room 587 Adam Smith Business School Building 

Abstract

This paper examines the benefits and costs of greenwashing in mutual funds. We identify greenwashing funds by analyzing their ESG-related disclosures using large language models (LLMs) alongside green investments. Greenwashing funds charge higher fees while attracting greater flows, with investors exhibiting tolerance for poor performance. However, they face higher regulatory and reputational costs. ESG-related comment letters issued by the SEC trigger outflows from greenwashing funds, spilling over to non-greenwashing funds within the same family. SEC’s scrutiny reduces future green disclosures, but its effectiveness weakens when SEC faces human capital constraints. Finally, institutional and retail investors respond differently to greenwashing behavio

Bio

Yong Chen is a Professor of Finance, the David R. Norcom ’73 Endowed Professor, and Coordinator of the Finance Ph.D. Program at Mays Business School, Texas A&M University. Prior to joining Mays Business School in 2012, he was on the faculty of Virginia Tech. Dr. Chen received B.A. and M.A. in Economics from Nankai University and Ph.D. in Finance from Boston College. Dr. Chen’s research area is empirical asset pricing and investments with a focus on the interaction between the investment of hedge funds and the behavior of asset prices. His research has been published in leading academic journals including the Journal of Finance, the Journal of Financial Economics, the Review of Financial Studies, the Journal of Financial and Quantitative Analysis, and Management Science and practitioner journals including Financial Analysts Journal and the Journal of Investment Management, as well as presented at numerous university workshops, academic and practitioner conferences, financial policymakers, and hedge funds. His research has received several awards and grants, such as the Graham and Dodd Scroll Award from the CFA Institute and a research grant from the Q group. Dr. Chen has taught advanced investments, derivatives, portfolio management, and empirical asset pricing at the undergraduate, MBA, MSF, and doctoral levels.

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First published: 17 March 2026