ESG rating divergence and stock price crash risk

IF 3.8 3区经济学 Q1 BUSINESS, FINANCE

North American Journal of Economics and Finance Pub Date : 2025-01-01 DOI:10.1016/j.najef.2024.102323

Chunhua Ju , Xusheng Fang , Zhonghua Shen

引用次数: 0

Abstract

This study aims to explore the impact of ESG rating divergence on firms’ stock price crash risk. Using ESG ratings from six different agencies, we find that a greater divergence in ESG ratings significantly lowers the likelihood of future crash risk. Specifically, the mechanism by which ESG rating divergence reduces crash risk lies in the fact that it triggers more investor attention as well as improves the quality of voluntary corporate disclosure. Further cross-sectional tests reveal that the negative impact of ESG rating divergence on crash risk is more pronounced when managers are more likely to conceal bad news. Finally, we also find that the relationship between the two is moderated by firm size and ownership structure. This paper offers new insights into how ESG rating divergence impacts firms’ capital market performance.

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来源期刊

North American Journal of Economics and Finance Multiple-

CiteScore

7.30

自引率

8.30%

发文量

168

期刊介绍： The focus of the North-American Journal of Economics and Finance is on the economics of integration of goods, services, financial markets, at both regional and global levels with the role of economic policy in that process playing an important role. Both theoretical and empirical papers are welcome. Empirical and policy-related papers that rely on data and the experiences of countries outside North America are also welcome. Papers should offer concrete lessons about the ongoing process of globalization, or policy implications about how governments, domestic or international institutions, can improve the coordination of their activities. Empirical analysis should be capable of replication. Authors of accepted papers will be encouraged to supply data and computer programs.