{"title":"Is disagreement beneficial for market efficiency? Evidence from ESG ratings","authors":"Libo Yin , Xiaoye Zhu , Zhi Su , Hongliang Guo","doi":"10.1016/j.jimonfin.2025.103322","DOIUrl":null,"url":null,"abstract":"<div><div>ESG rating disagreement refers to discrepancies in ESG performance ratings assigned to a firm by different rating agencies. This study investigates how ESG rating disagreement impacts firm pricing efficiency. These findings demonstrate that ESG rating disagreement contributes to promoting firm pricing efficiency. This effect is especially noticeable during periods of decreased market sentiment, volatility, turnover, and increased liquidity and among firms with specific characteristics, including large market capitalization, value orientation, higher institutional ownership, and superior ESG ratings. The facilitative effect of ESG rating disagreement stems from the diverse information provided by ESG rating agencies, which is more effectively incorporated into stock prices because of the enhanced learning effect of investors. This study is important for achieving a more comprehensive and objective understanding of ESG rating disagreement in financial markets.</div></div>","PeriodicalId":48331,"journal":{"name":"Journal of International Money and Finance","volume":"154 ","pages":"Article 103322"},"PeriodicalIF":2.8000,"publicationDate":"2025-03-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Journal of International Money and Finance","FirstCategoryId":"96","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S0261560625000579","RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q2","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}
引用次数: 0
Abstract
ESG rating disagreement refers to discrepancies in ESG performance ratings assigned to a firm by different rating agencies. This study investigates how ESG rating disagreement impacts firm pricing efficiency. These findings demonstrate that ESG rating disagreement contributes to promoting firm pricing efficiency. This effect is especially noticeable during periods of decreased market sentiment, volatility, turnover, and increased liquidity and among firms with specific characteristics, including large market capitalization, value orientation, higher institutional ownership, and superior ESG ratings. The facilitative effect of ESG rating disagreement stems from the diverse information provided by ESG rating agencies, which is more effectively incorporated into stock prices because of the enhanced learning effect of investors. This study is important for achieving a more comprehensive and objective understanding of ESG rating disagreement in financial markets.
期刊介绍：
Since its launch in 1982, Journal of International Money and Finance has built up a solid reputation as a high quality scholarly journal devoted to theoretical and empirical research in the fields of international monetary economics, international finance, and the rapidly developing overlap area between the two. Researchers in these areas, and financial market professionals too, pay attention to the articles that the journal publishes. Authors published in the journal are in the forefront of scholarly research on exchange rate behaviour, foreign exchange options, international capital markets, international monetary and fiscal policy, international transmission and related questions.
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