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ESG rating and short selling in the corporate bond market

Author

Listed:
  • Li, Ying
  • Guo, Xu
  • Huang, Wei
  • Ma, Xiaomeng

Abstract

This paper explores the effect of ESG ratings on corporate bond short interest. Using corporate bond data from 2006 to 2022, we show that higher issuers’ ESG scores are associated with lower bond short interest. Further examination reveals that changes in ESG scores can predict future changes in bond ratings. Overall, our findings suggest that bond short sellers consider issuers’ ESG scores as valuable indicators in making investment decisions.

Suggested Citation

  • Li, Ying & Guo, Xu & Huang, Wei & Ma, Xiaomeng, 2024. "ESG rating and short selling in the corporate bond market," Finance Research Letters, Elsevier, vol. 61(C).
    • Handle: RePEc:eee:finlet:v:61:y:2024:i:c:s154461232400028x
    DOI: 10.1016/j.frl.2024.104998
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    ESG; Short selling; Corporate bond;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions

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