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
  • 2022
  • Article
  • Financial Analysts Journal

Which Corporate ESG News Does the Market React To?

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

Abstract

Using a dataset that classifies firm-level ESG news as positive and negative, we examine how stock prices react to different types of ESG news. We analyze 111,020 firm-day observations for 3,126 companies and find that prices react only to issues identified as financially material for a given industry by sustainability accounting standards, and the reaction is larger for news that is positive, receives more attention, and that is related to social capital issues. We conclude that investors differentiate in their reactions based on whether the news is likely to affect a company’s fundamentals, and therefore their reactions are motivated by a financial rather than a nonpecuniary motive.

Keywords

ESG; ESG (Environmental, Social, Governance) Performance; ESG Ratings; Social Capital; Environment; Sustainability; CSR; Stock Price; Stock Market Expectations; Materiality; Market Reaction; Environmental Sustainability; Governance; Social Issues; Performance; News

Citation

Serafeim, George, and Aaron Yoon. "Which Corporate ESG News Does the Market React To?" Financial Analysts Journal 78, no. 1 (2022): 59–78.
  • SSRN
  • Find it at Harvard

About The Author

George Serafeim

Accounting and Management
→More Publications

More from the Authors

    • 2022
    • Faculty Research

    Machine Learning Models for Prediction of Scope 3 Carbon Emissions

    By: George Serafeim and Gladys Velez Caicedo
    • 2022
    • Faculty Research

    A Conceptualization of Sub-Living Wages: Liabilities, Leverage, and Risk

    By: Drew Keller, Katie Panella and George Serafeim
    • June 2022
    • Faculty Research

    Business Implications from Regulating Carbon Emissions in the EU

    By: George Serafeim and Benjamin Maletta
More from the Authors
  • Machine Learning Models for Prediction of Scope 3 Carbon Emissions By: George Serafeim and Gladys Velez Caicedo
  • A Conceptualization of Sub-Living Wages: Liabilities, Leverage, and Risk By: Drew Keller, Katie Panella and George Serafeim
  • Business Implications from Regulating Carbon Emissions in the EU 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