The Irrelevance of Environmental, Social, and Governance Disclosure to Retail Investors

Austin Moss (), James P. Naughton () and Clare Wang ()
Additional contact information
Austin Moss: Leeds School of Business, University of Colorado Boulder, Boulder, Colorado 80309
James P. Naughton: Darden Graduate School of Business, University of Virginia, Charlottesville, Virginia 22903
Clare Wang: Leeds School of Business, University of Colorado Boulder, Boulder, Colorado 80309

Management Science, 2024, vol. 70, issue 4, 2626-2644

Abstract: Using an hourly data set on retail investor individual security positions from Robinhood Markets, we find no evidence that environmental, social, and governance (ESG) disclosures inform retail investors’ buy and sell decisions. The response on ESG press release days by retail investors is indistinguishable from nonevent days. In contrast, these same investors make economically meaningful changes to their portfolios in response to non-ESG press releases, especially those that pertain to earnings announcements. We use stock return tests to show that there is economic content in ESG press releases, and we conduct subsample analyses showing that retail investors do not respond to the most salient and economically transparent ESG disclosures. Collectively, these tests suggest that a lack of economic content, a lack of visibility, and difficulty with investment integration are unlikely to explain our findings.

Keywords: ESG; retail investors; Robinhood; corporate social responsibility; ESG disclosure (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://dx.doi.org/10.1287/mnsc.2023.4822 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:70:y:2024:i:4:p:2626-2644

Access Statistics for this article

More articles in Management Science from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().