The Irrelevance of ESG Disclosure to Retail Investors: Evidence from Robinhood

47 Pages Posted: 12 Jun 2020 Last revised: 21 Oct 2022

See all articles by Austin Moss

Austin Moss

University of Colorado Boulder

James P. Naughton

University of Virginia, Darden School of Business

Clare Wang

University of Colorado at Boulder - Leeds School of Business

Date Written: May 19, 2020

Abstract

Using an hourly dataset on retail investor individual security positions from Robinhood Markets, we find that ESG disclosures do not inform retail investors’ buy and sell decisions. The response to ESG press releases by retail investors is no different than the routine portfolio adjustments that occur on non-event days. In contrast, these same investors make economically meaningful changes to their portfolios in response to non-ESG press releases, especially those that cover earnings announcements. Our findings are not due to a lack of statistical power or other data shortcomings. We also conduct additional analyses which suggest that our results are not due to a lack of economic content, a lack of visibility, or difficulty in integrating information from ESG press releases into investment decisions. Our evidence may be helpful to regulators that are considering how ESG information should be disclosed to capital market participants.

Keywords: ESG, Retail Investors, Corporate Social Responsibility

JEL Classification: M41, D83, G14, G32, G34

Suggested Citation

Moss, Austin and Naughton, James P. and Wang, Clare, The Irrelevance of ESG Disclosure to Retail Investors: Evidence from Robinhood (May 19, 2020). Available at SSRN: https://ssrn.com/abstract=3604847 or http://dx.doi.org/10.2139/ssrn.3604847

Austin Moss

University of Colorado Boulder ( email )

Boulder, CO 80309
United States

James P. Naughton

University of Virginia, Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

Clare Wang (Contact Author)

University of Colorado at Boulder - Leeds School of Business ( email )

Boulder, CO 80309-0419
United States

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