Noise or signal? ESG rating disagreement and stock price crash risk

Existing research generally views ESG rating disagreement as “information noise” that exacerbates information asymmetry and elevates stock price crash risk. This study proposes a new perspective: ESG rating disagreement may function as an “uncertainty signal” that conveys to the market the difficulty of definitively assessing a firm’s ESG performance, thereby stimulating information search and external monitoring and ultimately reducing crash risk. Using quarterly data from Chinese A-share listed companies, we find the following: (1) ESG rating disagreement is significantly negatively associated with stock price crash risk, a finding that holds across multiple robustness tests and instrumental variable estimation; (2) mechanism analysis reveals that rating disagreement suppresses crash risk by stimulating external information attention, including analyst coverage and research report coverage; and (3) the suppressive effect is concentrated among firms with lower institutional ownership, non-state-owned enterprises, and firms not audited by the Big Four. This study reconceptualizes ESG rating disagreement from “information noise” to an “uncertainty signal,” offering a new lens for understanding its informational value and providing implications for investor decision-making and regulatory policy design.