How different are the (Non-)U.S. investors? Evidence from market reactions to global ESG incidents

Hafeez, Bilal ORCID: https://orcid.org/0000-0003-3628-0860 and Tosun, Onur Kemal ORCID: https://orcid.org/0000-0003-2551-1408 2025. How different are the (Non-)U.S. investors? Evidence from market reactions to global ESG incidents. Finance Research Letters 85 , p. 108074. 10.1016/j.frl.2025.108074

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Abstract

This study examines the differences in responses to ESG incidents between U.S. and non-U.S. investors on a global scale and the possible explanations for this phenomenon. Using a dataset of 150,174 ESG incidents across 30 countries, we find that non-U.S. investors tend to overreact with a 5-day cumulative abnormal return 0.58 % lower compared to their U.S. counterparts. This corresponds to approximately $46.26 Million in additional market value losses. The effect is even stronger for domestic incidents where the return drops by 0.64 %, equivalent to about $51.36 Million in losses. Despite the country-level variation in views on ESG, we document that this divergence stems from differences in efficiency between the U.S. and non-U.S. markets. Non-U.S. investor overreaction disappears once informational efficiency in those markets improves.

Item Type:	Article
Date Type:	Publication
Status:	Published
Schools:	Schools > Business (Including Economics)
Publisher:	Elsevier
ISSN:	1544-6123
Date of First Compliant Deposit:	1 December 2025
Date of Acceptance:	1 August 2025
Last Modified:	01 Dec 2025 17:00
URI:	https://orca.cardiff.ac.uk/id/eprint/182790

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