Corporate ESG Profiles and Investor Horizons

Laura T. Starks; PARTH VENKAT; Qifei Zhu

doi:10.1111/jofi.70008

journal article Open Access Jan 08, 2026

Corporate ESG Profiles and Investor Horizons

Laura T. Starks

PARTH VENKAT Qifei Zhu

The Journal of Finance Vol. 81 No. 2 pp. 603-642 · Wiley

View at Publisher Save 10.1111/jofi.70008

Abstract

ABSTRACT
We find that long‐term institutional investors tilt their portfolios toward firms with better Environmental, Social, and Governance (ESG) profiles, in the cross sections of both institutional investor portfolios and the ownership of firms. We test whether several theoretically motivated mechanisms can explain this relationship. Our results that long‐term investors exhibit patience with firms around poor earnings announcements, but quickly sell portfolio firms after negative ES incidents, support the view that long‐ and short‐term investors evaluate information differently. Our evidence shows that limits‐to‐arbitrage play a role, as we find that investors' ESG tilt weakens following regulatory shocks that shorten their horizon.

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Details

Published: Jan 08, 2026
Vol/Issue: 81(2)
Pages: 603-642
License: View

Authors

Nanyang Business School, Nanyang Technological University, Singapore 639798, Singapore

Cite This Article

Laura T. Starks, PARTH VENKAT, Qifei Zhu (2026). Corporate ESG Profiles and Investor Horizons. The Journal of Finance, 81(2), 603-642. https://doi.org/10.1111/jofi.70008

Corporate ESG Profiles and Investor Horizons

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