Which Corporate ESG News Does the Market React To?

Serafeim, George; Yoon, Aaron

doi:10.1080/0015198x.2021.1973879

Cited by 101 publications

(62 citation statements)

References 21 publications

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“…Yoon [34], we observe the uniqueness of the banking sector, as investors do react to workforce issues (which mostly focus on human capital) as human capital is one of a bank's growth drivers.…”

Section: Diverse Types Of Controversiesmentioning

confidence: 96%

“…According to P. Chollet, B.W. Sandwidi [33] and G. Serafeim, A. Yoon [34], another sort of heterogeneity is a type of negative event. G. Serafeim and A. Yoon [34] found that there is an investor reaction solely to material ESG issues, social capital, and no such reaction exists to human capital issues.…”

Section: The Impact Of Esg Controversies On Firm Valuementioning

confidence: 99%

“…As it was proven above, financial institutions are a special case in terms of ESG performance. Banks are also unique in terms of controversies, according to G. Serafeim and A. Yoon [34], who noted the materiality concept in investors' perception of controversies. According to the ESG materiality map, environmental disputes are not fully relevant for a bank, since controversies regarding water, paper or energy usage efficiency are too rare.…”

Section: The Impact Of Esg Controversies On Firm Valuementioning

confidence: 99%

“…According to G. Serafeim and A. Yoon [34], one should look at SASB materiality map when considering different ESG news topics. Notwithstanding, product responsibility is one of the key aspects in bank materiality; investors do not react to such ESG news.…”

Section: Diverse Types Of Controversiesmentioning

confidence: 99%

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The Impact of ESG Controversies on Bank Value and Risk-taking

Староверова¹

2022

КФ

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ESG performance is one of the most important non-financial factors investors pay attention to when valuing a bank. Previous studies, devoted to bank ESG performance, rely solely on ESG ratings. The contribution of this paper to the existing literature is investigation of a new measure of ESG performance – ESG controversies. ESG controversies are covered in the media negative news that reflect a bank failure in ESG performance. The goal of this paper is to investigate the influence of negative ESG news on market value and stability of companies in a banking sector.A cross-country sample of 134 banks and data on 1,200 controversies from 2016 to 2020 are used in this study. Our results provide evidence that ESG controversies negatively affect bank value and have no impact on its stability. However, the effect on share prices is not unified: it is stronger for banks that are in the scope of investor attention, and this relation is observed for developed markets with high freedom of press exclusively. Moreover, investors take into consideration the reason of ESG controversy occurrence. They react strongly to negative ESG news, related to community and workforce.

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Section: Diverse Types Of Controversiesmentioning

confidence: 96%

Section: The Impact Of Esg Controversies On Firm Valuementioning

confidence: 99%

Section: The Impact Of Esg Controversies On Firm Valuementioning

confidence: 99%

Section: Diverse Types Of Controversiesmentioning

confidence: 99%

See 2 more Smart Citations

The Impact of ESG Controversies on Bank Value and Risk-taking

Староверова¹

2022

КФ

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“…Existing studies on these questions are still controversial. Research has proven that the capital market has an “incentive effect” on environmental investments, sustainable announcements with a significant financial impact bring positive abnormal returns, and firms affected by IPO suspensions may show lower CSR in their listing year (Grewal et al 2021 ; Schiehll and Kolahgar 2021 ; Serafeim and Yoon 2022 ; Li et al 2022 ). Especially in the face of extreme risks (e.g., financial crises and the COVID-19 global pandemic), companies with good ESG performance had relatively stable market capitalization and more resilient stock prices (Lins et al 2017 ; Broadstock et al 2021 ; Boubaker et al 2022 ).…”

Section: Introductionmentioning

confidence: 99%

Can capital markets identify heterogeneous environmental investment strategies of firms? Evidence from China

Cheng

Feng

2023

Environ Sci Pollut Res

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Using a 2005–2020 sample of A-share listed companies in China’s heavily polluting industries, this paper divides environmental investment strategies into “light green,” “medium green,” and “deep green” dimensions and constructs a panel threshold model to investigate the impact of different environmental strategies on China’s stock market. The study found that environmental investment intensity has a double threshold effect on stock returns, “medium green” behavior helps improve stock returns, and “light green” and “deep green” behaviors are not conducive to stock returns. Institutional investors are more accurate than ordinary investors in identifying heterogeneous environmental strategies. The mechanism test shows that different environmental strategies affect stock returns through internal “value enhancement” and external “government subsidy” mechanisms. Moreover, “greenwashing” benefits for companies are short-lived; the market eventually imposes punitive pricing. These findings provide a reference for enterprise- and market-oriented green development systems.

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An empirical analysis of corporate sustainability bonds

Mathew,

Sivaprasad

2023

Bus Strat Env

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This study examines the performance of worldwide corporate sustainability bonds issued from 2014 to 2020. Unlike traditional bonds, the proceeds of sustainability bonds are utilised for financing projects to bring about environmental and socio‐economic benefits. We analyse the short‐term market reaction to announcements of sustainability and traditional bond issuance and document that the stock market reaction to an announcement of sustainability bonds is stronger than that for traditional bonds. We also find that multiple issuers of sustainability bonds achieve a more favourable market reaction than single issuers. Finally, we examine if environmental, social and governance (ESG) scores can positively and significantly impact the corporate performance of firms through the lens of sustainability bond issuances. We find that ESG scores are the primary performance drivers for firms, and the effect is more pronounced for firms that issue sustainability bonds. Overall, the results suggest that issuers of sustainability bonds show their commitment towards environmental and societal goals and thus benefit from favourable stock market reactions.

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Which Corporate ESG News Does the Market React To?

Cited by 101 publications

References 21 publications

The Impact of ESG Controversies on Bank Value and Risk-taking

The Impact of ESG Controversies on Bank Value and Risk-taking

Can capital markets identify heterogeneous environmental investment strategies of firms? Evidence from China

An empirical analysis of corporate sustainability bonds

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