The role of ESG in negative news

This study examines the financial impact of workplace accidents on publicly listed Taiwanese firms, with a particular focus on stock market reactions and ESG-related factors. The findings reveal a significant negative market response to workplace accidents, as reflected in abnormal returns (AR) and cumulative abnormal returns (CAR). Investors penalize firms with inadequate workplace safety measures, leading to immediate stock price declines. However, ESG-adopting firms experience smaller market losses, suggesting that sustainability practices enhance resilience to operational risks. Industry analysis indicates that sectors with inherently hazardous conditions, such as construction and shipping, report the highest accident incidence, highlighting the need for stringent safety regulations. Regression results show that firm size moderates market reactions, with larger firms experiencing less severe declines. Moreover, firms with high price-to-book (PB) ratios face stronger negative market reactions, implying heightened investor scrutiny. A t-test comparing ESG-adopting and non-ESG firms finds no statistically significant difference in AR and CAR. However, ESG-adopting firms exhibit smaller negative reactions, supporting the role of ESG in mitigating financial risks. Companies with strong ESG performance exhibit resilience, mitigating financial losses. The findings emphasize workplace safety’s role in corporate stability and investor confidence, reinforced the importance of implementing ESG.