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Professor Jian Sun
Assistant Professor of Finance
Lee Kong Chian School of Business
Singapore Management University

We study strategic interactions among investors, firms, and information sellers in a market with manipulable information. Investors seeking to learn firm characteristics can purchase scores from a monopolistic information seller, who aggregates firm-provided signals that are subject to manipulation. Firms’ manipulation incentives depend on equilibrium price sensitivity to the scores. The introduction of mandate investors– who care about scores, not actual characteristics–creates incentives for score inflation. Applying our framework to green investing, we find: 1) the effectiveness of green investing on firms’ cost of capital can decline as the prevalence of green investing or strength of green mandates rises; 2) overly stringent mandates may result in investors holding less-desired stocks.