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Stock market reaction to ESG-oriented management: an event study analysis on a disclosing policy in Japan'

Author

Listed:
  • Nahoko Mitsuyama

    (Graduate School of Economics, The University of Tokyo)

  • Satoshi Shimizutani

    (Institute for International Policy Studies)

Abstract

ESG investment, a new form of portfolio allocation that takes into consideration the non-financial factors of firms such as environmental (E), social (S), and corporate governance (G) issues in business, has gained prominence in the capital market. However, empirical evidence on the attractiveness to investors and resultant stock price reaction toward ESG-oriented firms has been scarce both inside and outside Japan. This study performs event study analysis to explore stock market reaction to the announcement of the “ESG Brand†consisting of firms that are judged to make serious efforts in favor of ESG aspects in business among the companies listed on the Tokyo Stock Exchange. The Brand selection was conducted after positive screening by a third party in an objective manner. Our finding reveals little evidence of a positive and significant stock price reaction to the Brand announcement around the event day. In addition, the result is not altered in terms of cumulative abnormal returns over a longer term. We conclude that the stock market did not respond to the announcement of the ESG Brand.

Suggested Citation

  • Nahoko Mitsuyama & Satoshi Shimizutani, 2015. "Stock market reaction to ESG-oriented management: an event study analysis on a disclosing policy in Japan'," Economics Bulletin, AccessEcon, vol. 35(2), pages 1098-1108.
    • Handle: RePEc:ebl:ecbull:eb-15-00118
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    File URL: http://www.accessecon.com/Pubs/EB/2015/Volume35/EB-15-V35-I2-P112.pdf
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    Citations

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    Cited by:

    1. Gaurav Talan & Gagan Deep Sharma, 2019. "Doing Well by Doing Good: A Systematic Review and Research Agenda for Sustainable Investment," Sustainability, MDPI, vol. 11(2), pages 1-16, January.
    2. Sahar E-Vahdati & Wan Nordin Wan-Hussin & Mohd Shazwan Mohd Ariffin, 2023. "The Value Relevance of ESG Practices in Japan and Malaysia: Moderating Roles of CSR Award, and Former CEO as a Board Chair," Sustainability, MDPI, vol. 15(3), pages 1-17, February.
    3. Justyna Przychodzen & Fernando Gómez-Bezares & Wojciech Przychodzen & Mikel Larreina, 2016. "ESG Issues among Fund Managers—Factors and Motives," Sustainability, MDPI, vol. 8(10), pages 1-19, October.

    More about this item

    Keywords

    ESG; event study; Japan's stock market; SRI; CSR; Tokyo Stock Exchange;
    All these keywords.

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • M2 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics

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