Abstract

My dissertation studies the potential for the increased importance of Environmental, Social, and Governance (ESG) information for corporations and investors in the U.S. market. In my first essay, I examine the effect of coverage by ESG rating agencies on firm ESG performance and disclosure policy. To control for the selection in coverage, I construct a sample of firms with existing ESG ratings from some agencies and study the marginal effect of an additional coverage on a firm relative to firms that did not receive the additional coverage. I find that when firm ESG coverage intensifies, its ESG ratings improve, its toxic emissions decline, and its board diversity increases. More covered firms disclose more ESG information and attract more institutional investors, especially institutions with revealed preferences for high-ESG stocks. The results suggest that ESG information providers exhibit material impact on firms. In my second essay, I examine the link between the diffusion of ESG practices in the mutual fund industry and the labor market of mutual fund portfolio managers. I find that portfolio managers are more likely to join funds with an ESG profile similar to the profile of their current fund. When the two profiles are mismatched, managers shift the ESG of their new fund in the direction of their past ESG record. The latter effect is stronger when the new managers are more experienced and represent a larger percentage of the management team. The effect is well pronounced for managers with revealed preferences for both high and low ESG stocks, and funds in both more and less ESG-friendly states. Managers with strong ESG records exhibit better fund performance over the year following the appointment. The results suggest that the labor market is an important factor in the propagation of ESG practices in the mutual fund industry.

Notes

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Graduation Date

2023

Semester

Spring

Advisor

Pirinsky, Christo

Degree

Doctor of Philosophy (Ph.D.)

College

College of Business Administration

Degree Program

Business Administration; Finance Track

Identifier

CFE0009482; DP0027482

URL

https://purls.library.ucf.edu/go/DP0027482

Language

English

Release Date

May 2023

Length of Campus-only Access

None

Access Status

Doctoral Dissertation (Open Access)

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Included in

Finance Commons

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