Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/316589 
Year of Publication: 
2021
Citation: 
[Journal:] East Asian Economic Review (EAER) [ISSN:] 2508-1667 [Volume:] 25 [Issue:] 2 [Year:] 2021 [Pages:] 125-150
Publisher: 
Korea Institute for International Economic Policy (KIEP), Sejong-si
Abstract: 
The paper investigates investor sentiment's role in boosting Japanese companies to enhance their environmental, social, and corporate governance (ESG) performance. Using ESG scores of 367 firms between 2005 and 2019 from the ASSET4 database, we find that negative sentiment in the previous year, both firm and market level, can be a stimulation for the company's commitments to its ESG activities next year. Notably, the moderating effect of the business sector and economic cycle on the sentiment-ESG inference are detected in our study differentiating between corporate and market sentiment, which have never been reported before. In detail, we discover that the impact of firm-specific sentiment is less pronounced for high-sensitive ESG firms. On the other hand, the driving force of market sentiment on corporate social behaviors weakens when economic recessions happen. Our results are robust after controlling for potential endogeneity issues and using alternative proxies for market sentiment.
Subjects: 
Firm-specific and Market Sentiment
Corporate Social Responsibility
ESG Performance
Business Sector
Economic Cycle
JEL: 
G30
G40
M14
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

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