Repeat Offenders ESG Incident Recidivism and Investor Underreaction

Simon Glossner

2021 | Academic | Investor Behavior

Firms’ past ESG incident rates predict more future incidents, weaker profitability, and lower risk-adjusted stock returns. These abnormal returns are consistent with markets underreacting to incidents, as past incident rates also predict larger analyst forecast errors, more negative stock price reactions when firms announce their quarterly earnings...