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Sustainability Efforts, Index Recognition, and Stock Performance

In: Risks Related to Environmental, Social and Governmental Issues (ESG)

Author

Listed:
  • Moonsoo Kang

    (Brooklyn College of the City University of New York)

  • K. G. Viswanathan

    (Hofstra University)

  • Nancy A. White

    (Hofstra University)

  • Edward J. Zychowicz

    (Hofstra University)

Abstract

We examine the long-term performance of stocks appearing in the Dow Jones Sustainability Index North America. We find that sustainability stocks exhibit abnormal returns for 12–30 months after the index listing, while those stocks generate no excess returns before the index listing. Moreover, sustainability stocks experience an increase in institutional ownership after the index listing. However, we find no evidence that short sellers increase their position to exploit a possible overpricing for sustainability stocks. Overall, our analysis suggests that sustainability efforts translate into a permanent increase in demand for stocks, leading to the superior performance.

Suggested Citation

  • Moonsoo Kang & K. G. Viswanathan & Nancy A. White & Edward J. Zychowicz, 2022. "Sustainability Efforts, Index Recognition, and Stock Performance," Springer Books, in: Marielle de Jong & Dan diBartolomeo (ed.), Risks Related to Environmental, Social and Governmental Issues (ESG), pages 45-57, Springer.
    • Handle: RePEc:spr:sprchp:978-3-031-18227-3_5
    DOI: 10.1007/978-3-031-18227-3_5
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