Unravelling investors’ diverging responses to U.S. firms' global ESG incidents
研究发现投资者对美国企业国内ESG事件的负面反应强于国际事件，且市场负面反应随人口距离和社会信任度增加而加剧，揭示了心理、社会和制度因素导致的反应不足。
We investigate whether and why investors' reactions to negative ESG incidents in U.S. firms vary by incident locations. We find that, on average, investors react negatively to these ESG incidents; and they react more negatively to domestic ESG incidents compared to international ones. Market negativity increases with closer demographic proximity and higher local social trust. The market reaction remains unaffected by the economic closeness or legal environment of the location. Our empirical evidence remains consistent across various robustness tests. Overall, our findings indicate that investors underreact to global ESG incidents in U.S. firms due to psychological, societal, and institutional factors.