Value creation or political trick? An event study on anti-ESG regulations

Oupin Tang, Xiaomeng Shi and Lili Jiu

Finance Research Letters, 2024, vol. 65, issue C

Abstract: This paper examines the effect of the anti-ESG regulations approved in 18 states from 2021 to 2023. Focusing on the fuel energy sector, we find that the regulatory intervention leads to 0.8 % to 3.5 % cumulative abnormal stock returns (CARs) around the regulation approval dates. The market reactions are found to be more positive and pronounced when the firm has poor previous ESG performance, when the firm is financially more constrained, and when the regulation is less controversial. Meanwhile, although fuel energy firms have more institutional ownership afterwards, their carbon emission also increases, indicating potential negative economic effects of anti-ESG policies.

Keywords: Anti-ESG policies; Event study; Institutional ownership; Carbon emissions (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:65:y:2024:i:c:s1544612324005609

DOI: 10.1016/j.frl.2024.105530

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