The Impact of Misleading Corporate Communication on Stock Performance

29 Pages Posted: 26 Jun 2024

See all articles by Lewei He

Lewei He

Lancaster University - Department of Accounting and Finance; Robeco Quantitative Investments

Harald Lohre

Robeco Quantitative Investments; Lancaster University Management School

Ingmar Nolte

Lancaster University - Department of Accounting and Finance

Chelsea Yaqiong Yao

Lancaster University - Lancaster University Management School

Date Written: June 19, 2024

Abstract

We observe an increase in the number of misleading communication incidents detected among all US-listed companies in the period from 2007 to 2022. Notably, governance washing incidents consistently led to significant negative abnormal returns of corresponding firms, while the negative impact of greenwashing incidents only became apparent after 2015. In contrast, social washing-related incidents lack significance over the sample period. The impact of misleading communication incidents is typically immediate upon disclosure but tends to dissipate within two weeks thereafter. When examining different sectors, we discover diverse responses to various types of misleading communication, highlighting the heterogeneous nature of this phenomenon across industries.

Keywords: Misleading Communication, Environmental Social and Governance (ESG), ESG incidents, Greenwashing, Event Studies

JEL Classification: G14, G40, Q51, Q56

Suggested Citation

He, Lewei and Lohre, Harald and Nolte, Ingmar and Yao, Yaqiong, The Impact of Misleading Corporate Communication on Stock Performance (June 19, 2024). Available at SSRN: https://ssrn.com/abstract=4871393 or http://dx.doi.org/10.2139/ssrn.4871393

Lewei He (Contact Author)

Lancaster University - Department of Accounting and Finance ( email )

The Management School
Lancaster LA1 4YX
United Kingdom

Robeco Quantitative Investments ( email )

Weena 850
Rotterdam, 3011 AG
Netherlands

Harald Lohre

Robeco Quantitative Investments ( email )

Weena 850
Rotterdam, 3011 AG
Netherlands

Lancaster University Management School

Bailrigg
Lancaster LA1 4YX
United Kingdom

HOME PAGE: http://www.lancaster.ac.uk/lums/people/harald-lohre

Ingmar Nolte

Lancaster University - Department of Accounting and Finance ( email )

Lancaster, Lancashire LA1 4YX
United Kingdom

Yaqiong Yao

Lancaster University - Lancaster University Management School ( email )

Department of Accounting and Finance
Lancaster University Management School
Lancaster, LA1 4YX
United Kingdom

HOME PAGE: http://www.chelseayao.com

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