Publications
Publications
- 2022
- Financial Analysts Journal
Which Corporate ESG News Does the Market React To?
By: George Serafeim and Aaron Yoon
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.