Ethics Events and Conditions of Possibility: How Sell-Side Financial Analysts Became Involved in Corporate Governance

Tan, Zhiyuan Simon

doi:10.2139/ssrn.3568839

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“…Few casual relations are more conducive to confirmation bias than Environmental, Social, and Governance (ESG) factors and financial performance. Given how meaningful this relationship may be in mitigating climate change, authors strive to show that firms that reduce their negative impacts on environmental and social outcomes are more resilient and generate better economic performance in the long run (e.g., Aouadi & Marsat, 2018; Auer, 2016; Duque‐Grisales & Aguilera‐Caracuel, 2019; Lokuwaduge & Heenetigala, 2017; Verheyden et al, 2016; Xiao et al, 2013) and that ESG events might impact stock prices and financial markets (e.g., Siew et al, 2016; Capelle‐Blancard & Petit, 2019; Tan, 2021; Xie et al, 2019). Mitigating climate change effects requires investors (and their proxies, fund managers) to change their behavior.…”

Section: Introductionmentioning

confidence: 99%

Why don't asset managers accelerate ESG investing? A sentiment analysis based on 13,000 messages from finance professionals

Zeidan

2022

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Mitigating climate change effects requires investors (and their proxies, fund managers) to shift their business‐as‐usual strategies. This article analyzes Environmental, Social, and Governance (ESG) investing behavior through more than 13,000 messages exchanged by finance professionals from 2017 to 2020. There is a consensus that low and high ESG firms' discrimination is a necessary but not sufficient condition for ESG investing. Moreover, it is one thing for fund managers to claim that they are integrating ESG factors in their portfolios and another to do it properly. The restriction of the strategy space, internal and external transaction costs, and data quality are still viewed as overwhelming obstacles for seamlessly integrating ESG into financial portfolios. Sentiment analysis indicates that asset managers hold a negative view of ESG investing, surprising as ethical investing is becoming increasingly common. Unlocking the potential positive externalities from ESG investing may require regulators and investors' actions to improve the quality of information disclosure and pressure fund managers into incorporating nonfinancial criteria in their investment models.

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Section: Introductionmentioning

confidence: 99%

Why don't asset managers accelerate ESG investing? A sentiment analysis based on 13,000 messages from finance professionals

Zeidan

2022

Bus Strat Env

View full text Add to dashboard Cite

show abstract

Ethics Events and Conditions of Possibility: How Sell-Side Financial Analysts Became Involved in Corporate Governance

Cited by 1 publication

References 0 publications

Why don't asset managers accelerate ESG investing? A sentiment analysis based on 13,000 messages from finance professionals

Why don't asset managers accelerate ESG investing? A sentiment analysis based on 13,000 messages from finance professionals

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