IDEAS home Printed from https://ideas.repec.org/a/inm/ormnsc/v70y2024i4p2626-2644.html
   My bibliography  Save this article

The Irrelevance of Environmental, Social, and Governance Disclosure to Retail Investors

Author

Listed:
  • Austin Moss

    (Leeds School of Business, University of Colorado Boulder, Boulder, Colorado 80309)

  • James P. Naughton

    (Darden Graduate School of Business, University of Virginia, Charlottesville, Virginia 22903)

  • Clare Wang

    (Leeds School of Business, University of Colorado Boulder, Boulder, Colorado 80309)

Abstract

Using an hourly data set on retail investor individual security positions from Robinhood Markets, we find no evidence that environmental, social, and governance (ESG) disclosures inform retail investors’ buy and sell decisions. The response on ESG press release days by retail investors is indistinguishable from nonevent days. In contrast, these same investors make economically meaningful changes to their portfolios in response to non-ESG press releases, especially those that pertain to earnings announcements. We use stock return tests to show that there is economic content in ESG press releases, and we conduct subsample analyses showing that retail investors do not respond to the most salient and economically transparent ESG disclosures. Collectively, these tests suggest that a lack of economic content, a lack of visibility, and difficulty with investment integration are unlikely to explain our findings.

Suggested Citation

  • Austin Moss & James P. Naughton & Clare Wang, 2024. "The Irrelevance of Environmental, Social, and Governance Disclosure to Retail Investors," Management Science, INFORMS, vol. 70(4), pages 2626-2644, April.
    • Handle: RePEc:inm:ormnsc:v:70:y:2024:i:4:p:2626-2644
    DOI: 10.1287/mnsc.2023.4822
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/mnsc.2023.4822
    Download Restriction: no
    File URL: https://libkey.io/10.1287/mnsc.2023.4822?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:ormnsc:v:70:y:2024:i:4:p:2626-2644. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Asher (email available below). General contact details of provider: https://edirc.repec.org/data/inforea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.