| March 17, 2020
This study reveals the benefits of a calm and measured approach to trading around bad-ESG news on U.S. stocks
While the existential benefits of ESG investing are apparent, the authors of this white paper investigate a possible negative side-effect from the trend towards ESG by examining how this approach to investing might affect the stock market efficiency.
Amid an increasing global focus on environmental, social, and governance issues in listed stocks – the so-called ESG factors – researchers have turned their attention to the impact on markets and investment performance of the ESG phenomenon.
What are the implications for investors when the stocks in their portfolio undergo ESG controversies? And how should investors navigate the market following the release of ESG related news?
These are some of the issues under the research spotlight as more investors include environmental, social, and governance issues in their decision-making criteria.
This study by Bei Cui and Paul Docherty uncovers new evidence and insights into how institutional investors behave collectively in response to ESG news events (both positive and negative), with implications for adjusting portfolios subsequent to ESG controversies, and how this may present opportunities for investors – particularly those of contrarian bent – to profit.
Easily implement the results of this White Paper using the RavenPack Analytics Platform, which includes ESG news event and sentiment data on over 50,000 companies, available via dashboards or our web APIs. Request a trial today.
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