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.

中文翻译：

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情绪在 ESG 绩效中的激励作用：来自日本公司的证据

本文调查了投资者情绪在推动日本公司提高其环境、社会和公司治理 (ESG) 绩效方面的作用。使用 ASSET4 数据库中 2005 年至 2019 年间 367 家公司的 ESG 分数，我们发现上一年的负面情绪，无论是公司层面还是市场层面，都可能会刺激公司明年对 ESG 活动的承诺。值得注意的是，在我们区分企业和市场情绪的研究中发现了商业部门和经济周期对情绪-ESG 推断的调节作用，这在以前从未被报道过。具体而言，我们发现公司特定情绪的影响对于高敏感度 ESG 公司的影响不那么明显。另一方面，当经济衰退发生时，市场情绪对企业社会行为的驱动力减弱。在控制了潜在的内生性问题并使用替代代理来衡量市场情绪后，我们的结果是稳健的。