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Corporate SDG adoption, share price synchronicity, and the role of incentive-compatible contracts in India

Rajat Sharma, Sonia Chawla, Vishal Dagar () and Leila Dagher

Finance Research Letters, 2025, vol. 74, issue C

Abstract: This study explores the impact of corporate SDG adoption on share price synchronicity in India's emerging market, focusing on the dissemination of firm-specific information. Using data from Indian firms, the analysis demonstrates that SDG adoption reduces share price synchronicity by enhancing stock market liquidity and attracting greater analyst coverage. The effect is stronger in non-state-owned firms and those with high institutional ownership. Further analysis reveals that subcategory PEOPLE SDGs has the most pronounced impact on share price synchronicity. The findings offer significant implications for policymakers, firms, and investors, suggesting the need to incentivize corporate SDG adoption to promote market transparency and informed investment decisions. More specifically, firms can leverage incentive-compatible contracts to increase SDG adoption, aligning corporate interests with sustainability goals, which further reduces information asymmetry and share price synchronicity.

Keywords: Corporate sustainability; Emerging markets; Investor behaviour; Market liquidity; Analyst coverage; Sustainable development goals (search for similar items in EconPapers)
JEL-codes: C58 D82 G12 G14 Q56 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:74:y:2025:i:c:s1544612325000042

DOI: 10.1016/j.frl.2025.106739

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