Stock price reactions to ESG news: the role of ESG ratings and disagreement

George Serafeim, Aaron Yoon*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

78 Scopus citations


We investigate whether environmental, social, and governance (ESG) ratings predict future ESG news and the associated market reactions. We find that the consensus rating predicts future news, but its predictive ability diminishes for firms with large disagreement between raters. The relation between news and market reaction is moderated by the consensus rating. In the presence of high disagreement between raters, the relation between news and market reactions weakens, while the rating with the most predictive power predicts future stock returns. Overall, while rating disagreement hinders the incorporation of value-relevant ESG news into prices, ratings predict future news and proxy for market expectations of future news.

Original languageEnglish (US)
Pages (from-to)1500-1530
Number of pages31
JournalReview of Accounting Studies
Issue number3
StatePublished - Sep 2023


  • ESG news
  • ESG rating
  • Market reaction
  • Ratings disagreement

ASJC Scopus subject areas

  • Accounting
  • General Business, Management and Accounting


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