ESG news-based public sentiment, media attention and stock price crash risk

Purpose This study aims to examine whether media-driven public perception of a firm’s environmental, social and governance performance (i.e. ESG news sentiment) and its media attention are associated with subsequent stock price crash risk. Using public sentiment formed from ESG news alone – separate from firms’ self-reported ESG performance – study investigates whether media-based ESG information provides incremental informational content about crash risk beyond disclosure-based ESG metrics. Design/methodology/approach The authors analyse more than 34,000 semi-annual firm-level observations for US-listed firms from 2011 to 2021, using Refinitiv MarketPsych ESG sentiment and media attention data. They conduct cross-sectional and channel tests and use firm/industry and time fixed effects, propensity score matching, generalised method of moments and instrumental two-stage least squares to mitigate concerns related to selection, simultaneity and omitted-variables. Findings Greater negative ESG news sentiment is associated with higher crash-risk measures, indicating that ESG narratives affect investors’ perceptions of downside risk. Higher ESG-related media attention is also associated with higher crash-risk measures and a stronger relation between ESG news sentiment and crash risk, consistent with an attention-amplification mechanism. Channel analyses indicate that ESG news sentiment is primarily directly associated with crash risk through risk perception, whereas the association between media attention and crash risk appears more strongly related to stock liquidity and return volatility channels. These associations weaken when firms face stronger external monitoring and intensify when firms operate in more opaque reporting environments. Practical implications The results suggest that ESG news sentiment and ESG-related media attention may provide useful contextual signals for investors and risk managers when assessing downside-risk exposure, particularly for firms with weaker monitoring or more opaque reporting. For firms and regulators, the findings underscore the potential importance of ESG disclosure credibility and monitoring of sustained ESG scrutiny. Originality/value This study distinguishes ESG news sentiment (tone) from ESG-related media attention (breadth of dissemination) and shows that they are conceptually and empirically distinct, exhibiting different time dynamics in their associations with crash-risk measures. The findings contribute to ESG, media and crash-risk research by highlighting the role of external information flows in shaping ESG perceptions relevant to downside-risk exposure.