Affiliation:
1. Rochester Institute of Technology
2. The University of Memphis
Abstract
ABSTRACT
We examine whether short sellers, as informed investors, take into consideration corporate social responsibility (CSR) performance and disclosure in the areas of environmental, social, and governance (ESG) sustainability in making investment decisions. We find that firms' market value and future financial performance, measured by price per share, return on equity, and return on assets, are lower, whereas operating risk, measured by the standard deviation of return on equity and the standard deviation of return on assets, is higher for firms with low composite ESG scores. We detect a negative association between ESG scores and short selling, indicating that short sellers avoid firms with high ESG scores and tend to target firms with low ESG scores. We conclude that investors consider firms' ESG scores as value relevant in making investment decisions and thus management should integrate CSR into strategic decisions and corporate reporting.
JEL Classifications: G32; M40.
Publisher
American Accounting Association
Subject
Accounting,Business and International Management
Reference78 articles.
1. Short sales are almost instantaneously bad news: Evidence from the Australian Stock Exchange;Aitken;The Journal of Finance,1998
2. Albuquerque, R.,
A. Durnev, and Y. Koskinen.
2014. Corporate Social Responsibility and Firm Risk: Theoretical and Empirical Evidence. Available at: http://ssrn.com/abstract=1961971
3. Value-relevance of nonfinancial information: The wireless communications industry;Amir;Journal of Accounting & Economics,1996
4. Short interest, institutional ownership, and stock returns;Asquith;Journal of Financial Economics,2005
5. Why companies go green: A model of ecological responsiveness;Bansal;Academy of Management Journal,2000
Cited by
95 articles.
订阅此论文施引文献
订阅此论文施引文献,注册后可以免费订阅5篇论文的施引文献,订阅后可以查看论文全部施引文献