Retail investors and ESG news: A discussion

Richard G. Sloan

Journal of Accounting and Economics, 2024, vol. 78, issue 2

Abstract: Li, Watts, and Zhu (2024) provide evidence that retail investors trade in response to financially material ESG news. This evidence is consistent with retail investors trading in response to the financial implications of ESG-related information in much the same way that they trade in response to the financial implications of other information. The authors suggest that their evidence is inconsistent with retail investors making investment decisions based on their nonpecuniary preferences. I suggest that their research design is constructed to identify financially motivated trading and is not well suited to drawing inferences about retail investors’ nonpecuniary investment decisions.

Keywords: Retail investors; ESG news; Financial materiality; Nonpecuniary preferences (search for similar items in EconPapers)
JEL-codes: G12 G14 G41 M14 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jaecon:v:78:y:2024:i:2:s0165410124000600

DOI: 10.1016/j.jacceco.2024.101730

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