Analysis Of the Impact of ESG Rating Divergence on Stock Returns
DOI:
https://doi.org/10.54097/w8bd3k11Keywords:
ESG rating divergence; stock returns; investor sentiment; internal governance.Abstract
With the increasingly serious problem of extreme climate, China's emphasis on sustainable development is increasing, and the ESG concept is gradually receiving attention from all sectors of society. Environmental, Social and Governance (ESG) rating results have become an important reference for investors when making decisions, and enterprises also incorporate ESG decisions into their management. However, at present, the rating results of various ESG rating agencies at home and abroad are different, with significant differences, which interfere with investor judgment and also have a certain impact on the stock returns of enterprises. This article reviews the literature on ESG rating divergence and stock returns, summarizing and elaborating on investor sentiment and internal corporate governance, and draws relevant conclusions. The divergence in ESG ratings may lower the reputation of the company and the positive market expectations of investors, affecting the effectiveness of ESG rating information for the company, thereby reducing investor demand for the company's stocks and leading to a decrease in stock returns.
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