Disclosures of ESG Misconducts and Market Valuations: Evidence from DAX Companies





event study, ESG misconducts, DAX, responsible investing, corporate social responsibility (CSR)


Environmental, social and governance (ESG) factors have become an important topic on capital markets amid an increasing interest in responsible investing. Despite this fact, public companies have been involved in a number of ESG misconducts in recent years, which were often against the interests of their stakeholders. In our research, we refer to stakeholder theory in order to show how disclosures of social misconducts against the companies’ stakeholders have affected market valuation of listed companies, which we treat as one of the measures of shareholders’ wealth. We conduct an event study on 235 ESG misconducts related to DAX companies. The data sample of ESG news was hand collected in a thorough content analysis in the period of 2000-2019. The main findings reveal that investors’ reactions were more severe for ESG news released after 2009 than before this date as illustrated by negative and significant cumulative average abnormal returns (CAARs) in different event windows, while before 2009 CAARs were insignificant. We also found out that investors reacted stronger to governance- rather than social or environmental news. Our results provide a guidance for listed companies on how ESG mismanagements might affect their market value, and for investors who intend to incorporate ESG factors in their investment decision processes.

Author Biographies

Anna Dziadkowiec, Wrocław University of Economics and Business, Poland

Anna Dziadkowiec is a PhD candidate at Wrocław University of Economics and Business at the Department of Corporate and Public Finance. Research field: corporate sustainability performance and its relation with value creation for stakeholders.

Karolina Daszynska-Zygadlo, Wroclaw University of Economics and Business, Poland

Karolina Daszyńska-Żygadło PhD, is an Assistant Professor at Wrocław University of Economics and Business (Poland) at the Department of Corporate and Public Finance. She received her PhD from Wrocław University of Economics and Business in the field of finance. She has been involved in various research projects in the topic of sustainability and financing of renewable energy investments. Research field: corporate finance and corporate sustainability, sustainable finance instruments.

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