Utilizing an event study approach, we document a significant market overreaction toward low ESG firms (positively) and firms in the alternative energy sector (negatively) following the election of Donald Trump as the 45th president of the U.S. We also show that a firm’s ESG rating plays a role in abnormal returns. Our findings cast doubt on the resilience of sustainable investments against market shocks.
Demirer et al. (Wed,) studied this question.