We investigate whether and why investors' reactions to negative ESG incidents in U.S. firms vary by incident locations. We find that, on average, investors react negatively to these ESG incidents; and they react more negatively to domestic ESG incidents compared to international ones. Market negativity increases with closer demographic proximity and higher local social trust. The market reaction remains unaffected by the economic closeness or legal environment of the location. Our empirical evidence remains consistent across various robustness tests. Overall, our findings indicate that investors underreact to global ESG incidents in U.S. firms due to psychological, societal, and institutional factors.

我们调查投资者对美国公司负面 ESG 事件的反应是否以及为何因事件地点而异。我们发现，平均而言，投资者对这些 ESG 事件反应消极；与国际事件相比，他们对国内 ESG 事件的反应更为消极。随着人口结构的接近和当地社会信任度的提高，市场负面情绪也会增加。市场反应不受该地区经济紧密程度或法律环境的影响。我们的经验证据在各种稳健性测试中保持一致。总体而言，我们的研究结果表明，由于心理、社会和制度因素，投资者对美国公司的全球 ESG 事件反应不足。