Abstract
an market discipline affect corporate environmental and social (E&S) policies? Using international data on corporate E&S news, we show that negative coverage of firms’ E&S policies affects negatively E&S-conscious investors’ demand for stocks. As a consequence, firms with more E&S-motivated investors experience larger temporary declines in valuations and subsequently improve their E&S policies. Such improvements are concentrated among firms with more informative stock prices and are not due to investor engagements, suggesting that firms learn about shareholders’ preferences from stock prices. Sales in E&S-conscious countries also decrease following negative E&S risk, but are not consistently associated with improvements in E&S policies.
Keywords
Corporate social responsibility; Price Informativeness; Real effects of financial markets; Institutional investors; Sustainability; Corporate governance; Culture;
JEL codes
- G15: International Financial Markets
- G23: Non-bank Financial Institutions • Financial Instruments • Institutional Investors
- G30: General
- M14: Corporate Culture • Diversity • Social Responsibility
Reference
Mariassunta Giannetti ( Stockholm School of Economics), “Does Money Talk? Market Discipline through Selloffs and Boycotts”, 2nd Sustainable Finance Center Conference, TSE, Toulouse, 2021.
See also
Published in
2nd Sustainable Finance Center Conference, TSE, Toulouse, 2021