Annual Conference

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Accounting

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May 2024

Do Sustainability Ratings Induce ESG Window-Dressing by Mutual Funds?

Kevin C. W. CHEN, Wilbur Xinyuan CHEN, Haifeng YOU
We find that after the initiation of Morningstar’s mutual fund ESG ratings, the implied returns from funds’ quarter-end holdings exhibit significantly higher ESG β than their actual returns. The increase in the ESG β gap between the two is greater for funds surrounding rating thresholds. ESG w...
Keywords: ESG Investing, Mutual Funds, Rating Agencies, Window-Dressing
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Annual Conference

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Accounting

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May 2024

Socially Responsible Investors and Stock Price Informativeness

Yong George YANG, Xintong ZHAN, Weiming ZHANG, Yaojia (Zoe) ZHANG
We study how socially responsible investors (SRIs) affect information incorporation in price. We find that a higher level of socially responsible institutional ownership results in a lower level of informativeness of current returns on future earnings. Using an exogenous shock to SRI ownership, we s...
Keywords: Socially responsible investors, ESG preference, Future earnings response coefficient (FERC), Future ESG response coefficient, information processing
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Annual Conference

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Accounting

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May 2024

Do firms respond to calls for environmental improvements made by retail investors?

T.J. WONG, Gwen YU, Shubo ZHANG, Tianyu ZHANG
Retail investors have become more vocal in pressuring firms to improve their environmental performance, yet little is known about whether and when firms respond to these pressures. We conduct a field experiment on investor online platforms where we inject investor pressure by posting requests for en...
Keywords: Retail investors, Pollution emissions, Disclosure, ESG, and Investor Online Platforms
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Annual Conference

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Accounting

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May 2024

Does Algorithmic Trading Affect Forced CEO Turnover?

Jaewoo KIM, Jun OH, Hojun SEO, Luo ZUO
We examine whether algorithmic trading (AT) affects the extent to which directors rely on stock returns when making CEO turnover decisions. We find that the sensitivity of forced CEO turnover to stock returns decreases with AT. This effect of AT is more pronounced when the information that AT crowds...
Keywords: Algorithmic trading, CEO turnover, CEO-firm match quality, directors, learning
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Annual Conference

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Accounting

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May 2024

Mobile Internet and Analyst Forecast Performance

Bingxu FANG, Sterling HUANG, Sugata ROYCHOWDHURY, Ewa SLETTEN
We study the impact of mobile internet technology on analyst forecast performance. Mobile internet facilitates uninterrupted access to various types of information and provides productivity tools for professionals. As such, it can help financial analysts gain immediate access to information and inte...
Keywords: mobile internet, Financial analysts, forecast accuracy, forecast timelines
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