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The impact of ESG rating divergence on stock price crash risk

Author

Listed:
  • Sun, Guanglin
  • Yan, Zian
  • Gong, Zejun
  • Li, Mengding

Abstract

This paper mainly examines the impact of ESG rating divergence on stock price crash risk using data from authoritative ESG rating agencies and Chinese A-share listed companies. The results suggest that ESG rating divergence increases the company's stock price crash risk. It is also found that the positive effect of ESG rating divergence on stock price crash risk is mainly realized through the paths of information asymmetry and agency costs. Additionally, the heterogeneity research indicates that the impact of ESG rating divergence on stock price crash risk is more pronounced in companies with better ESG performance and larger sizes. This paper not only enriches the existing literature on the economic consequences of ESG rating divergence but also provides new insights for addressing ESG rating divergence.

Suggested Citation

  • Sun, Guanglin & Yan, Zian & Gong, Zejun & Li, Mengding, 2025. "The impact of ESG rating divergence on stock price crash risk," International Review of Financial Analysis, Elsevier, vol. 102(C).
    • Handle: RePEc:eee:finana:v:102:y:2025:i:c:s1057521925001681
    DOI: 10.1016/j.irfa.2025.104081
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