Do Investor Reactions Differ Across the Lifecycle of ESG Initiatives?

Firms often take on environmental, social, and governance (ESG) initiatives to increase their sustainability and the positive feelings among investors. However, specific ESG initiatives, like all business initiatives, rarely continue indefinitely, and “pruning” them is an integral part of firms’ strategic approach to ESG. Firms may discontinue even successful ESG initiatives, perhaps because of financial strain or uncertainty from developments like the COVID-19 pandemic. In a recent paper, we investigate how investors’ reactions to ESG might change over the lifecycle of an ESG initiative. Specifically, we test the idea that investors are most sensitive to the ethical implications of … Read more