Lemons and Timber. The Case of Tropical Timber Investment Funds in the Netherlands

Philosophica 80 (2):105-119 (2007)
  Copy   BIBTEX

Abstract

In this paper, we analyze the behavior of Dutch tropical timber investment funds in relation to financial regulation. These funds are a niche market within the market for socially responsible investments. During the past few years, several Dutch timber funds went bankrupt, whereas others were surrounded by scandals. Partly as a reaction to this, tighter regulation was developed and implemented. In response to the regulatory changes timber funds adjusted their operations and business strategy. The lack of supervision of timber funds, the subsequent tightening of the regulation and the strategic responses of the timber funds fits into the ‘regulatory dialectic’ as described by Edward Kane. Moreover, we can use Akerlof’s concept of informational asymmetries to explain the underlying cause of the regulatory dialectic. The key problem with the Dutch timber funds is that there is no financial supervision with respect to the liquidity and the solvency of the timber funds. Consequently, investors are unable to verify the claims made by the timber funds, which causes major information asymmetries between the two parties. Our case study demonstrates how a lack of regulation can spoil a market that in itself has the potential to offer something useful to society.

Other Versions

No versions found

Links

PhilArchive



    Upload a copy of this work     Papers currently archived: 103,401

External links

Setup an account with your affiliations in order to access resources via your University's proxy server

Through your library

Similar books and articles

The Environmental Performance of Dutch Government Bond Funds.Bert Scholtens - 2010 - Journal of Business Ethics 92 (S1):117 - 130.

Analytics

Added to PP
2013-03-01

Downloads
45 (#516,855)

6 months
3 (#1,061,821)

Historical graph of downloads
How can I increase my downloads?

Citations of this work

Practicalities bottleneck to pension fund responsible investment?Riikka Sievänen - 2014 - Business Ethics, the Environment and Responsibility 23 (3):309-326.

Add more citations

References found in this work

No references found.

Add more references