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Value creation or political trick? An event study on anti-ESG regulations

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  • Tang, Oupin
  • Shi, Xiaomeng
  • Jiu, Lili

Abstract

This paper examines the effect of the anti-ESG regulations approved in 18 states from 2021 to 2023. Focusing on the fuel energy sector, we find that the regulatory intervention leads to 0.8 % to 3.5 % cumulative abnormal stock returns (CARs) around the regulation approval dates. The market reactions are found to be more positive and pronounced when the firm has poor previous ESG performance, when the firm is financially more constrained, and when the regulation is less controversial. Meanwhile, although fuel energy firms have more institutional ownership afterwards, their carbon emission also increases, indicating potential negative economic effects of anti-ESG policies.

Suggested Citation

  • Tang, Oupin & Shi, Xiaomeng & Jiu, Lili, 2024. "Value creation or political trick? An event study on anti-ESG regulations," Finance Research Letters, Elsevier, vol. 65(C).
    • Handle: RePEc:eee:finlet:v:65:y:2024:i:c:s1544612324005609
    DOI: 10.1016/j.frl.2024.105530
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    Cited by:

    1. Fabrizio Ferriani & Marcello Pericoli, 2024. "ESG risks and corporate viability: insights from default probability term structure analysis," Questioni di Economia e Finanza (Occasional Papers) 892, Bank of Italy, Economic Research and International Relations Area.

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