Not by whom but where: ESG events, place attachment, and firm value

Abstract

Equity analysts from countries impacted by negative ESG events start issuing significantly lower recommendations for the firms that committed the events compared to analysts from other countries. Consistent with place attachment as mechanism, the effect intensifies with greater attachment, lasts for more than a year, and does not spill over to remaining firms covered by the analysts. Trading by institutional investors around ESG events also exhibits place attachment, suggesting external validity. Taken together, these results document that personal attributes, such as place attachment, can lead to disagreement in the valuation of ESG events, substantially exceeding changes in consensus valuation.

Keywords: Analyst recommendations, ESG incidents, Sell-side analysts, Location

JEL Classification: D91,G14, G29, G41