IDEAS home Printed from https://ideas.repec.org/a/eee/finlet/v65y2024ics1544612324005609.html
   My bibliography  Save this article

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

Author

Listed:
  • 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
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1544612324005609
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.frl.2024.105530?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Stefan J. Hock & Sascha Raithel, 2020. "Managing Negative Celebrity Endorser Publicity: How Announcements of Firm (Non)Responses Affect Stock Returns," Management Science, INFORMS, vol. 66(3), pages 1473-1495, March.
    2. Luca Braghieri & Ro'ee Levy & Alexey Makarin, 2022. "Social Media and Mental Health," American Economic Review, American Economic Association, vol. 112(11), pages 3660-3693, November.
    3. Jia, Ning & Mao, Xinshu & Yuan, Rongli, 2019. "Political connections and directors' and officers' liability insurance – Evidence from China," Journal of Corporate Finance, Elsevier, vol. 58(C), pages 353-372.
    4. Toni M. Whited & Guojun Wu, 2006. "Financial Constraints Risk," The Review of Financial Studies, Society for Financial Studies, vol. 19(2), pages 531-559.
    5. Callaway, Brantly & Sant’Anna, Pedro H.C., 2021. "Difference-in-Differences with multiple time periods," Journal of Econometrics, Elsevier, vol. 225(2), pages 200-230.
    6. Min Zhang & Jun Su & Yuefan Sun & Wen Zhang & Na Shen, 2015. "Political Connections and Corporate Diversification: An Exploration of Chinese Firms," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 51(1), pages 234-246, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Li, Tongxia & Ang, Tze Chuan ‘Chewie’ & Lu, Chun, 2023. "Employment protection and the provision of trade credit," Journal of Banking & Finance, Elsevier, vol. 155(C).
    2. Dak-Adzaklo, Cephas Simon Peter & Wong, Raymond M.K., 2024. "Corporate governance reforms, societal trust, and corporate financial policies," Journal of Corporate Finance, Elsevier, vol. 84(C).
    3. Bai, Min & Shen, Luxi & Li, Yue & Yu, Chia-Feng (Jeffrey), 2024. "Does legal justice promote stakeholder justice? Evidence from a judicial reform in China," International Review of Financial Analysis, Elsevier, vol. 94(C).
    4. Ma, Rui & Guo, Fei & Li, Dongdong, 2024. "Can public data availability affect stock price crash risk? Evidence from China," International Review of Financial Analysis, Elsevier, vol. 94(C).
    5. Chen, Zhiwu & Cao, Yuqiang & Feng, Zhuoan & Lu, Meiting & Shan, Yaowen, 2023. "Broadband infrastructure and stock price crash risk: Evidence from a quasi-natural experiment," Finance Research Letters, Elsevier, vol. 58(PA).
    6. He, Weimin & Wang, Bin, 2024. "Environmental jurisdiction and energy efficiency: Evidence from China's establishment of environmental courts," Energy Economics, Elsevier, vol. 131(C).
    7. Chen, Jie & Mishra, Tapas & Song, Wei & Zhang, Qingjing & Zhang, Zhuang, 2024. "The impact of bank mergers on corporate tax aggressiveness," Journal of Corporate Finance, Elsevier, vol. 84(C).
    8. Chien, Chih-Chung & Chen, Shikuan & Chang, Ming-Jen, 2023. "Financial constraints on credit ratings and cash-flow sensitivity," International Review of Financial Analysis, Elsevier, vol. 88(C).
    9. Schultheiss, Tobias & Pfister, Curdin & Gnehm, Ann-Sophie & Backes-Gellner, Uschi, 2023. "Education expansion and high-skill job opportunities for workers: Does a rising tide lift all boats?," Labour Economics, Elsevier, vol. 82(C).
    10. Wang, Zhenggang & Wu, Zenan & Yuan, Ye, 2024. "We’ve got you covered! The effect of public health insurance on rural entrepreneurship in China," Journal of Public Economics, Elsevier, vol. 235(C).
    11. Gao, Yihong & Gao, Jiayan, 2023. "Low-carbon transformation and corporate cash holdings," Finance Research Letters, Elsevier, vol. 54(C).
    12. Xie, Tingting & Yuan, Ye & Zhang, Hui, 2023. "Information, awareness, and mental health: Evidence from air pollution disclosure in China," Journal of Environmental Economics and Management, Elsevier, vol. 120(C).
    13. Huang, Keqi & Liu, Qiren, 2024. "Artificial intelligence and outward foreign direct investment: Evidence from China," Journal of Asian Economics, Elsevier, vol. 92(C).
    14. Bas Scheer & Wiljan van den Berge & Maarten Goos & Alan Manning & Anna Salomons, 2022. "Alternative Work Arrangements and Worker Outcomes: Evidence from Payrolling," CPB Discussion Paper 435, CPB Netherlands Bureau for Economic Policy Analysis.
    15. Mac Clay, Pablo & Börner, Jan & Sellare, Jorge, 2023. "Institutional and macroeconomic stability mediate the effect of auctions on renewable energy capacity," Energy Policy, Elsevier, vol. 180(C).
    16. Liu, Duan & Yu, Nizhou & Wan, Hong, 2022. "Does water rights trading affect corporate investment? The role of resource allocation and risk mitigation channels," Economic Modelling, Elsevier, vol. 117(C).
    17. Alex Hollingsworth & Krzysztof Karbownik & Melissa A. Thomasson & Anthony Wray, 2024. "The Gift of a Lifetime: The Hospital, Modern Medicine, and Mortality," American Economic Review, American Economic Association, vol. 114(7), pages 2201-2238, July.
    18. Yuan, Li & Rao, Siqi & Yang, Shenggang & Dai, Pengyi, 2023. "Does equity market openness increase productivity? the dual effects of Shanghai-Hong Kong stock Connect program in China," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 88(C).
    19. Catalina Amuedo‐Dorantes & Francisca M. Antman, 2022. "De facto immigration enforcement, ICE raid awareness, and worker engagement," Economic Inquiry, Western Economic Association International, vol. 60(1), pages 373-391, January.
    20. Anderson, D. Mark & Liang, Yang & Sabia, Joseph J., 2022. "Mandatory Seatbelt Laws and Traffic Fatalities: A Reassessment," IZA Discussion Papers 15843, Institute of Labor Economics (IZA).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:finlet:v:65:y:2024:i:c:s1544612324005609. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/frl .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.