Association between Earnings Announcement Behaviors and ESG Performances

Abstract

Despite the rapidly growing interest in ESG business management, it is not easily attainable for stakeholders to accurately assess the quality of the ESG activities of a firm due to several problems, including the exaggeration or greenwashing of the real ESG performance. This study investigates whether managerial opportunism, as revealed by earnings announcement behaviors, can be utilized as a hallmark to forecast the quality of ESG performance. Based on the tests using Korean firms, the empirical results show that opportunistic behaviors for earnings announcement announcements, such as the announcement on Friday, after market closing, and omitting preliminary earnings disclosure, are all negatively associated with the ESG performance score on an individual and also collective basis. Further analysis shows that firms with opportunistic strategies for earnings announcement tend to miss the disclosure on ESG activities as well. In sum, this study contributes to future research and policy-making by suggesting a new practical approach to analyzing the earnings announcement behaviors as a quick test to verify the corporate ESG performance.