Key points are not available for this paper at this time.
This paper examines the effect of the anti-ESG regulations approved in 18 states from 2021 to 2023. Focusing on the fuel energy sector, we find that the regulatory intervention leads to 0.8% to 3.5% cumulative abnormal stock returns (CARs) around the regulation approval dates. The market reactions are found to be more positive and pronounced when the firm has poor previous ESG performance, when the firm is financially more constrained, and when the regulation is less controversial. Meanwhile, although fuel energy firms have more institutional ownership afterwards, their carbon emission also increases, indicating potential negative economic effects of anti-ESG policies.
Tang et al. (Tue,) studied this question.