Exploring the relationship between ESG performance and information asymmetry : Evidence from Nasdaq Stockholm

Sammanfattning: The relationship between a firm’s ESG performance and information asymmetry is a well-covered research area, however, few studies have been conducted on the markets covered by EU regulation and the NFRD. This thesis aims to fill the research gap by examining the relationship between ESG performance and information asymmetry in firms listed on Nasdaq Stockholm, to provide evidence from the EU’s regulatory landscape. The study uses both fixed effects and random effects models to examine the relationship and aims to clarify the effect following the implementation of NFRD in the EU. The results suggest a negative relationship between ESG performance and information asymmetry when employing bid-ask spread as a proxy for information asymmetry. Additionally, trading volume and volatility are examined as proxies for information asymmetry, yet these show no support for a negative relationship. Further, the effect of NFRD does not show consistent results, thus not substantiating any robust evidence across the proxies. However, when employing bid-ask spread as a proxy for information asymmetry the results show implications of a stronger relationship after the implementation of NFRD.