ESG Signaling on Wall Street in the AI Era

I identify a new signaling channel in ESG research by empirically examining whether environmental, social, and governance (ESG) investing remains valuable as large institutional investors increasingly shift toward artificial intelligence (AI). Using winsorized ESG scores of S&P 500 firms from Yahoo Finance and controlling for market value of equity, I conduct cross-sectional regressions to test the signaling mechanism. I demonstrate that Environmental, Social, Governance, and composite ESG score...