“Are ESG ratings relevant? Evidence from dividend cuts”
by Güner Velioğlu
Loyola University
Place: MA-330
Abstract
I find that the market reactions to dividend cuts are significantly less severe when the underlying firms have high Environmental, Social, and Governance (ESG) ratings. Among different components of ESG ratings, I find that the environmental pillar rating contributes most significantly to my findings. I further document that high ESG performance premium tend to partially substitute for dividend premium. Overall, my findings are consistent with the notion that negative demand shocks from dividend cuts are absorbed with milder reactions when firms are favored by ESG-motivated investors.
Bio
Güner Velioğlu is an Assistant Professor of Finance at Loyola University Chicago, Quinlan School of Business. Prior to joining Quinlan School of Business, he earned his Ph.D. in Finance at the University of Florida, Warrington College of Business. He also holds a master’s degree in Economics from Sabancı University, and a bachelor’s degree in Business Administration from Boğaziçi University. The main theme of his research is private information, and how it affects corporate decisions as well as the related asset prices. His research interests, while primarily in corporate finance, span across various topics in finance such as corporate social responsibility, credit risk, financial intermediation, information flow between securities markets, and market frictions and their impact in OTC markets.
