Research on How Divergent ESG Rating Criteria Influence Investor Behavior and Financial Market Outcomes

Jingping Qu ()
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Jingping Qu: Guangzhou College of Commerce, School of Economics

A chapter in Proceedings of the 2025 4th International Conference on Public Service, Economic Management and Sustainable Development (PESD 2025), 2025, pp 139-147 from Springer

Abstract: Abstract With the growing emphasis on sustainable and responsible investing, ESG ratings have become an important reference for investors. However, the lack of consistency among ESG rating agencies raises concerns about the reliability and comparability of such ratings. This study investigates the implications of divergent ESG rating standards for investment decisions and market performance, with a particular focus on how rating discrepancies influence investor perceptions, capital allocation, and stock price behavior. Through qualitative content analysis and a case study of Tesla Inc., this paper explores how ESG rating divergence weakens the signaling effect of ESG information in financial markets. The findings suggest that inconsistent ESG ratings reduce the informational value of ESG ratings, increase market uncertainty, and potentially distort asset pricing. This study deepens our understanding of the challenges posed by unstandardized ESG assessments and advocates for greater transparency and convergence in evaluation frameworks.

Keywords: ESG ratings; investment decision-making; market performance; responsible investment (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-916-2_17

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DOI: 10.2991/978-94-6463-916-2_17

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