arbiter
JournalsAccount

Evidence on the non-linear relation between ESG and SEO announcement returns

Moritz Heiß et al.

Journal of Economics and Finance2026https://doi.org/10.1007/s12197-026-09753-1article
AJG 1ABDC B
Weight
0.50

Abstract

This study investigates the non-linear relationship between environmental, social, and governance (ESG) performance (proxied by LSEG ESG data) and short-term market reactions to the announcement of seasoned equity offerings (SEOs) among listed manufacturing firms in the U.S. The event-based design mitigates concerns of reverse causality, which often arise in studies analyzing the relationship between ESG performance and company value. We document evidence of an inverted U-shaped relationship for total ESG and social pillar scores from 2020 to 2023. Environmental pillar scores are negatively associated with market reactions over the same period. The results are insignificant over the period 2016 to 2019. Buy-and-hold abnormal returns (BHARs) and underpricing are not found to be related to ESG performance. The observed non-linear pattern is consistent with interpretations in which moderate ESG engagement is viewed more favorably by investors, whereas very high levels of ESG engagement may be associated with concerns about costs or symbolic activity, inter alia.

Open via your library →

Cite this paper

https://doi.org/https://doi.org/10.1007/s12197-026-09753-1

Or copy a formatted citation

@article{moritz2026,
  title        = {{Evidence on the non-linear relation between ESG and SEO announcement returns}},
  author       = {Moritz Heiß et al.},
  journal      = {Journal of Economics and Finance},
  year         = {2026},
  doi          = {https://doi.org/https://doi.org/10.1007/s12197-026-09753-1},
}

Paste directly into BibTeX, Zotero, or your reference manager.

Flag this paper

Evidence on the non-linear relation between ESG and SEO announcement returns

Flags are reviewed by the Arbiter methodology team within 5 business days.

Evidence weight

0.50

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.50 × 0.4 = 0.20
M · momentum0.50 × 0.15 = 0.07
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.