Controversial ESG Events and Share Price Movement: A Short-Term Event Study for the Composite Materials Sector

Zoom Information

https://utoronto.zoom.us/j/89623105294

Meeting ID: 896 2310 5294

Passcode: 408436

Abstract

Recently, topics such as corporate ethics and sustainability have grown in stakeholder and investor interest. In the Metals & Mining Industry, controversial events such as corporate scandals and environmental contamination are among the many highlighted controversial events by media and press to date. That said, the present study aimed to understand and analyze the relationship between controversial events and share price movement of companies listed on the S&P/TSX Composite Materials Sector GICS Level 1 Index through a short-term event study. This event study focused on the release of media announcements for controversial events and abnormal share price returns at close. It was hypothesized that controversial events across the three categories of ESG (environmental, social, governance) would cause a shift in share price movement – positive or negative in direction. The study, although cautiously able to accept its alternative hypothesis, ultimately failed to reject the null hypothesis, as share price movement occurred for under 40% of the entire sample. This finding, although consistent with previous and similar studies, leads to the question of how and why short-term ESG information fails to be incorporated within the market, and whether or not the source of this information is to blame for a lack or slow pace of information integration in the market. This study adds to the body of research linking the interdisciplinary nature of sustainability and investor decision-making – highlighting the need for further research into investor behavior and ESG/sustainable news.