TY - JOUR T1 - Impact of ESG Factors on Emerging Market Stock Returns JF - The Journal of Impact and ESG Investing SP - 138 LP - 147 DO - 10.3905/jesg.2021.1.029 VL - 2 IS - 2 AU - Dinabandhu Bag AU - Satyajit Mohanty Y1 - 2021/11/30 UR - https://pm-research.com/content/2/2/138.abstract N2 - Empirical evidence indicates that environmental, social, and governance (ESG) practices are associated with a company’s financial performance, but little has been mentioned about investors’ attention toward stock performance. In this article, the authors conduct a test of the relationship between ESG performance disclosures and a company’s financial or capital market performance. They choose a stratified sample of large-cap companies across eight sectors drawn from the S&P 100 from 2016–2021. The changes in ESG ratings—namely, for governance and the environment—exhibit a small but significant impact on the stock’s performance. Their results show that a few ESG disclosures are positively related and dominate over the usual company-level determinants of return on assets. They find corporate governance practices to be more significant than climate change disclosures. These outcomes are robustly demonstrated on use cases of top stocks with investor safety recommendations. The results could have useful implications for investors, fund managers, and regulators. ER -