| Autor: |
Wenya Sun, Yichen Luo, Siu-Ming Yiu, Luping Yu, Wenzhi Ding |
| Jazyk: |
angličtina |
| Rok vydání: |
2024 |
| Předmět: |
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| Zdroj: |
Financial Innovation, Vol 10, Iss 1, Pp 1-21 (2024) |
| Druh dokumentu: |
article |
| ISSN: |
2199-4730 |
| DOI: |
10.1186/s40854-024-00635-1 |
| Popis: |
Abstract The informativeness of environmental, social, and governance (ESG) scores and their actual impact on firms remains understudied. To address this gap in the literature, we make theoretical predictions and conduct empirical research revealing that a high ESG score is associated with a lower probability of ESG scandals and lower stock returns during a scandal event. Our results suggest that ESG scores are heterogeneous but informative, and that a strong ESG reputation may have both positive and negative consequences for firms. Drawing on our findings, we develop a model and showcase that firms face an optimization problem when determining optimal ESG investment levels. Two equilibria may exist based on the trade-off between ESG scandal losses and ESG adjustment costs. Our model explains why certain firms make heterogeneous ESG decisions |
| Databáze: |
Directory of Open Access Journals |
| Externí odkaz: |
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