Skip to Main Content
HBS Home
  • About
  • Academic Programs
  • Alumni
  • Faculty & Research
  • Baker Library
  • Giving
  • Harvard Business Review
  • Initiatives
  • News
  • Recruit
  • Map / Directions
Faculty & Research
  • Faculty
  • Research
  • Featured Topics
  • Academic Units
  • …→
  • Harvard Business School→
  • Faculty & Research→
Publications
Publications
  • Forthcoming
  • Article
  • Review of Accounting Studies

Stock Price Reactions to ESG News: The Role of ESG Ratings and Disagreement

By: George Serafeim and Aaron Yoon
  • Format:Print
ShareBar

Abstract

We investigate whether ESG ratings predict future ESG news and the associated market reactions. We find that the consensus rating predicts future news, but its predictive ability diminishes for firms with large disagreement between raters. Relation between news and market reaction is moderated by the consensus rating. In the presence of high disagreement between raters, the relation between news and market reactions weakens while the rating with most predictive power predicts future stock returns. Overall, while rating disagreement hinders the incorporation of value relevant ESG news into prices, ratings predict future news and proxy for market expectations of future news.

Keywords

ESG; ESG (Environmental, Social, Governance) Performance; ESG Disclosure; ESG Ratings; ESG Reporting; ESG Disclosure Metrics; Sustainability; Investments; Disagreement; Rating Disagreement; Ratings; Environmental Sustainability; Social Issues; Corporate Social Responsibility and Impact; Performance; News; Investment; Financial Markets; Stocks; Price

Citation

Serafeim, George, and Aaron Yoon. "Stock Price Reactions to ESG News: The Role of ESG Ratings and Disagreement." Review of Accounting Studies (forthcoming). (Pre-published online March 10, 2022.)
  • SSRN
  • Find it at Harvard

About The Author

George Serafeim

Accounting and Management
→More Publications

More from the Authors

    • March 2023
    • Faculty Research

    Northvolt: Building Batteries to Fight Climate Change

    By: Debora L. Spar, Georgios Serafeim and Julia Comeau
    • January 2023
    • Faculty Research

    Elon Musk at Tesla

    By: George Serafeim and Amram Migdal
    • January 2023
    • Faculty Research

    Organizational Climate Transition Risk Model

    By: George Serafeim and Benjamin Maletta
More from the Authors
  • Northvolt: Building Batteries to Fight Climate Change By: Debora L. Spar, Georgios Serafeim and Julia Comeau
  • Elon Musk at Tesla By: George Serafeim and Amram Migdal
  • Organizational Climate Transition Risk Model By: George Serafeim and Benjamin Maletta
ǁ
Campus Map
Harvard Business School
Soldiers Field
Boston, MA 02163
→Map & Directions
→More Contact Information
  • Make a Gift
  • Site Map
  • Jobs
  • Harvard University
  • Trademarks
  • Policies
  • Accessibility
  • Digital Accessibility
Copyright © President & Fellows of Harvard College