Does ESG negative screening work?

Robert Eccles (), Shiva Rajgopal () and Jing Xie
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Robert Eccles: Said Business School at Oxford University
Shiva Rajgopal: Columbia Business School, Columbia University

No 202404, Working Papers from University of Macau, Faculty of Business Administration

Abstract: We revisit the firm value and pricing implications of the negative screening of sin stocks. Unlike prior work, we find that institutional ownership and valuations related to sin stocks are not different from those of other stocks after controlling for differences in fundamentals between sin and nonsin stocks. Sin stocks do not differ in the likelihood of exiting the public market, the cost of raising new equity, and the announcement returns around negative ESG news relative to non-sin stocks, casting further doubt on whether negative screening hurts sin stocks. However, the cost of new debt is higher for sin stocks.

Keywords: ESG; exclusion; negative screening; socially responsible investing; firm valuation; performance (search for similar items in EconPapers)
JEL-codes: D71 G12 G23 G30 (search for similar items in EconPapers)
Pages: 59 pages
Date: 2024-06
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Published in UM-FBA Working Paper Series

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