arbiter
JournalsAccount

Betting against ESG Sinners: Evidence from short selling around the world

Tsuyoshi Iwata et al.

Journal of Behavioral and Experimental Finance2026https://doi.org/10.1016/j.jbef.2026.101152article
AJG 1ABDC A
Weight
0.50

Abstract

This paper examines short-selling around negative environmental, social, and governance (ESG) events. Using FIS Global lending and RepRisk incident data, we apply propensity score matching to analyze abnormal returns, short-selling activity, and borrowing rate changes across equity indices in the United States, Europe, and Japan. We provide the first empirical evidence on stock price behavior and short-selling activity around negative ESG events, and offer backtesting results for ESG short-only and long-short strategies using effective borrowing rates. Results reveal regional patterns. In the U.S., evidence shows pre-event price declines and increases in short-selling activity before ESG incidents are disclosed. In Japan, reactions vary by event type and timing, with some co-movement in lending markets. In the EU, responses are shaped by regulatory guidance, with limited lending market effects. Findings highlight regional contrasts in ESG information incorporation and imply that encouraging ESG shorting may enhance market efficiency and autonomy in ESG integration. • The provision of empirical evidence on stock price behavior and short-selling activity around negative ESG events. • The offer of realistic backtesting results for short-only and long-short strategies using effective borrowing rates. • The implication for policymakers that encouraging ESG shorting may enhance market efficiency and autonomy.

Open via your library →

Cite this paper

https://doi.org/https://doi.org/10.1016/j.jbef.2026.101152

Or copy a formatted citation

@article{tsuyoshi2026,
  title        = {{Betting against ESG Sinners: Evidence from short selling around the world}},
  author       = {Tsuyoshi Iwata et al.},
  journal      = {Journal of Behavioral and Experimental Finance},
  year         = {2026},
  doi          = {https://doi.org/https://doi.org/10.1016/j.jbef.2026.101152},
}

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

Flag this paper

Betting against ESG Sinners: Evidence from short selling around the world

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.