| dc.description.abstract | In this master thesis, we examine how negative ESG news specific to individual firms impact
the market value of publicly traded companies in the US and Europe over a short term period.
We assess news events of 329 listed companies in the period between 2010 and 2020. Initially,
we conduct an event study with the full sample to test a general but fundamental hypothesis and
analyze whether we can find negative abnormal returns that are significantly different from zero
following firm specific negative ESG news.
Moreover, to provide further insight, we perform three additional event study analyzes with
split samples. To examine whether companies with higher ESG commitment are being
penalized by the market, we split the sample using UN Global Compact membership as a proxy.
Furthermore, we split the sample based on the reach of the media source that reported the
incident, and lastly whether the incident was new or recurring for the individual firms.
Our analysis reveals a significant negative abnormal return for ESG incidents that were
considered novel for the companies. Additionally, incidents reported by limited reach media
sources also show a marginally significant negative impact. Moreover, our findings indicate
that companies operating within specific industries tend to face more pronounced negative
abnormal returns when the news incidents are related to environmental issues. Furthermore, we
find marginally significant results of companies with higher ESG commitment experiencing
larger negative abnormal results. However, concerning our general research question, we
cannot find evidence suggesting that ESG news has a significant negative effect on a public
company’s market value in the short term. | en_US |
