Information disclosure and ESG rating disagreement: Evidence from green bond issuance in China

Abstract

We explore the relationship between information disclosure and ESG rating disagreement using China's A-share listed companies' green bond issuance from 2011 to 2021. We find a significantly positive correlation between corporate green bond issuance and ESG rating disagreement, which suggests that the ESG ratings disagreement among rating agencies tends to increase for firms with the issuance of green bonds. The results hold valid after a series of robustness tests. We also find that after issuing green bonds, the firm's ESG disclosure score improves significantly, especially in the environmental and social disclosure score components, indicating that firms indeed disclose additional environmental and social information along the issuance of green bonds, which leads to the increase of ESG rating disagreement among rating agencies. Especially, the effect on ESG rating disagreement of the information disclosure is more prominent for firms with more related information disclosed and more attention. In further analysis, we find a positive moderating effect of ESG reports between green bond issuance and ESG rating disagreement.