 Market responses to ESG amid signs of ESG De-institutionalization: evidence from the 2024 economic shock and Trump’s election victoryHaitian Wei, Chai-Aun Ooi and Rasidah Mohd-Rashid Finance Research Letters, 2025, vol. 81, issue C Abstract: Amid the recent ESG de-institutionalization by major financial institutions, this study investigates market responses to ESG factors during two major events that shake the U.S. stock market in 2024: (1) an economic shock and (2) a political shock tied to Trump’s election victory. Overall, the market reacts negatively to higher-ESG stocks during both events. However, the economic shock does not trigger a significant effect of ESG on the returns of stocks held by institutional or retail strategic traders, whereas the political shock does, particularly reflecting a shared preference for stocks with stronger governance performance. We also find that ESG performance in fully free-floated stocks has a significantly negative impact on returns only during the political shock, suggesting that informed traders capitalized on Trump’s anti-ESG narrative. Ultimately, our findings imply that the market increasingly values ESG through the lens of regulatory and institutional support, rather than viewing it solely as a stakeholder-driven imperative for sustainability. Keywords: ESG; Economic; Recession; Politics; Election; Shock; market response; 2024 (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:81:y:2025:i:c:s1544612325007160 DOI: 10.1016/j.frl.2025.107457 Access Statistics for this article Finance Research Letters is currently edited by R. Gençay More articles in Finance Research Letters from Elsevier |
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