Event study demonstrates reduced shareholder losses during ESG incidents in countries with strong institutions, highlighting the dominant role of national policy.
We examine how investors respond to environmental, social and governance (ESG) incidents, and whether country‐level sustainability institutions and firm‐level corporate social responsibility (CSR) shape the magnitude of reaction. Using an event study of ESG incidents across 48 countries, we find that stronger national sustainability development substantially cushions shareholder wealth losses. Firm CSR offers no such protection, instead intensifying negative market reactions when national institutions are well developed. We further document cross‐country variation due to mandatory ESG disclosure, societal pressure and governance quality. Together, our findings show that national sustainability institutions are the primary determinant of how capital markets price ESG risk.
No takes yet. Share an insight, caveat, or question.
Ho et al. (2026) studied this question.
Synapse has enriched 5 closely related papers on similar clinical questions. Consider them for comparative context: