Stock market reaction to mandatory ESG disclosure

Jiazhen Wang, Xiaolu Hu and Angel Zhong

Finance Research Letters, 2023, vol. 53, issue C

Abstract: Employing an event-study approach, we examine stock market reaction to the enactment of the Environmental, Social and Governance (ESG) Disclosure Simplification Act of 2021 by the United States House of Representatives. The Act mandates disclosure of standardized ESG metrics among American public companies. A significantly negative reaction of -1.1% is documented across all firms, which does not recover until the fifth day. Carbon-intensive firms and industries are more vulnerable to the negative market reaction. The negative reaction attenuates among firms with higher ESG scores.

Keywords: Event study; ESG disclosure; Nonfinancial disclosure; Climate-related financial risks; Mandatory disclosure (search for similar items in EconPapers)
JEL-codes: G12 G14 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:53:y:2023:i:c:s1544612322005797

DOI: 10.1016/j.frl.2022.103402

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