ESG rating and stock price crash risk: Evidence from China

Jingwen Feng, John W. Goodell and Dehua Shen

Finance Research Letters, 2022, vol. 46, issue PB

Abstract: While several studies evidence that firm social responsibility lowers stock crash risk, few investigate this for China. Further, few studies investigate the aggregate role of environmental, social, and corporate governance responsibilities, rather than just social responsibility alone. Additionally, unlike previous studies, we consider both stakeholder and agency explanations. We investigate the relationships between environmental, social, and corporate governance (ESG) ratings and stock price crash risk, finding a statistically and economically significant negative relationship for Chinese firms. Results are consistent with agency-theory based explanations. Results will be of interest to scholars interested in the general impact of promotion of public goods on firm performance, as well as to researchers and investors interested in the Chinese institutional environment.

Keywords: Stock price crash risk; ESG evaluation; Market capitalization; Sustainable investment (search for similar items in EconPapers)
JEL-codes: G12 G14 G34 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (58)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:46:y:2022:i:pb:s1544612321004566

DOI: 10.1016/j.frl.2021.102476

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