ESG Performance and Stock Price Synchronicity: Empirical Evidence From the US Stock Market

ABSTRACT This study examines the relationship between environmental, social, and governance (ESG) performance and stock price synchronicity using a sample of 86 S&P 500 firms over the period 2011–2021. While prior literature has explored the role of ESG disclosure in shaping market efficiency and investor behavior, limited evidence exists on the specific informational channels through which ESG performance influences stock price synchronicity. Drawing on the irrational noise attenuation perspective, this study argues that improved ESG performance enhances the corporate information environment by reducing speculative trading and idiosyncratic volatility, leading to higher stock price synchronicity. Using Refinitiv ESG scores and a generalized least squares (GLS) framework with robustness tests, the results show that overall ESG performance, as well as environmental, social and governance dimensions, positively and significantly affect stock price synchronicity. These findings suggest that ESG‐related transparency contributes to more efficient price formation by improving information dissemination and reducing noise trading. The study contributes to the ESG–finance literature by providing new evidence on the informational role of ESG performance in a highly regulated and mature market context.