Poor Firm Management and Stock Returns

Do negative environmental, social and governance (ESG) incidents (environmental pollution,
poor employment conditions or anti-competitive practices) indicate poor firm management and therefore underperforming stocks? In his February 2021 paper entitled “ESG Incidents and Shareholder Value”, Simon Glossner analyzes ESG incident data to determine whether: (1) history is predictive of future ESG incidents; (2) high incident rates impact firm performance: and, (3) the stock market prices incidents. Using over 80,000 incident news items, firm information and stock returns for 2,848 unique U.S. public firms starting January 2007 and a smaller sample for European firms starting January 2009, all through December 2017, he finds that: (more…)