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Published in:
2022 | OriginalPaper | Chapter
Sustainability Efforts, Index Recognition, and Stock Performance
Authors : Moonsoo Kang, K. G. Viswanathan, Nancy A. White, Edward J. Zychowicz
Published in: Risks Related to Environmental, Social and Governmental Issues (ESG)
Publisher: Springer Nature Switzerland
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We examine the long-term performance of stocks appearing in the Dow Jones Sustainability Index North America. We find that sustainability stocks exhibit abnormal returns for 12–30 months after the index listing, while those stocks generate no excess returns before the index listing. Moreover, sustainability stocks experience an increase in institutional ownership after the index listing. However, we find no evidence that short sellers increase their position to exploit a possible overpricing for sustainability stocks. Overall, our analysis suggests that sustainability efforts translate into a permanent increase in demand for stocks, leading to the superior performance.