Is the pilot policy for carbon emission trading beneficial for ESG disclosure? Evidence from a quasi-natural experiment in China

We explored how company transparency, as measured by ESG (Environmental, Social and Governance) disclosure, affected the employee turnover of 212 multinational corporations that were listed in the European capital market during the 2010-2017 period. We also examined the role of the business environment by looking at the company’s ESG reporting system and its economic sector. To analyze how ESG disclosure affected employee turnover at any point of its conditional distribution, we used a panel data quantile regression model. ESG disclosure was found to be negatively associated with employee turnover. Employee turnover, as well as the extent to which it is affected by ESG disclosure, was found to depend strongly on the conditional distribution of the turnover rate, the sector and whether ESG disclosure is mandatory or voluntary. Our findings were confirmed by a robustness check analysis. In conclusion, the relationship between company transparency and employee turnover depends strongly on the institutional context and, especially, on disclosure regulation. The more a company is scrutinized, the more it will try to be socially responsible to maintain and/or improve its reputation and thus reassure and satisfy its stakeholders. Abstract We sought to analyze the relationship between ESG (Environmental, Social and Governance) disclosure and employee turnover. We also examined how this relationship is affected by regulation of ESG reporting and by sector characteristics. A panel data quantile regression model was applied to data from 212 multinational corporations that were listed in the European capital market during the 2010-2017 period. ESG disclosure was found to be negatively associated with employee turnover. Employee turnover, as well as the extent to which it is affected by ESG disclosure, was found to depend strongly on the conditional distribution of the turnover rate, the economic sector, and whether ESG disclosure is mandatory or voluntary. A robustness check clearly confirmed our findings.

Based on the stakeholders, voluntary disclosure and legitimacy theories, this study investigates the determining factors of ESG (Environmental, Social and Governance) disclosure at firm and country level from the perspective of emerging countries. Furthermore, it analyzes the relationship between ESG disclosure and the cost of debt of Brazilian companies, in the context of Brazil's macro and mesoregions. It is known that studies aimed at investigating ESG criteria have grown in Brazil and around the world as ESG disclosure practices are incorporated into investment decisions (Yu & Luu, 2021). This research expands the discussions on this topic by investigating how ESG disclosures are impacted by aspects at firm and country level, in the context of emerging countries, whose growth is significant in relation to more developed countries, although they are less efficient markets and with less liquidity (Kearney, 2012). Furthermore, it focuses on analyzing the relationship between ESG disclosure and the cost of debt of Brazilian companies, as Brazil represents one of the emerging countries with the largest number of signatories to the United Nations Principles for Responsible Investments (PRI) (PRI, 2023b; Yamahaki & Frynas, 2016), in which 86% of the 100 largest Brazilian companies (N100) report sustainability reports, a value higher than the general average (79%) of the 58 countries investigated (KPMG, 2022). This study is therefore composed of two Essays, with Essay 1 focusing on understanding the influence of firm-level factors, the corruption index and legal enforcement on ESG disclosures by companies in emerging countries. Using ESG disclosure data from 19 countries in the period 2016-2021, multilevel models were estimated in a sample with 19,468 firm-year observations. It is believed that internal factors of organizations, focused especially on financial performance and the characteristics of the board of directors, as well as particularities at country level, are relevant in companies' ESG disclosures. The results signaled a positive effect of the presence of women and independent members on the board of directors and a sustainability/CSR/ESG committee on ESG disclosure, as well as showing that less corrupt countries tend to have greater ESG disclosure. Contrary to expectations, it was noted that countries with greater political rights present lower ESG disclosure and there was no significance of financial performance, CEO duality and the rule of law in ESG disclosures. Essay 2, in turn, discusses the impact of ESG disclosure on the cost of debt of Brazilian, non-financial firms, considering the effect of regionality. In a sample containing 576 firm-year observations, dynamic panel models were estimated with System GMM in one or two steps and, contrary to expectations, ESG disclosure did not show a negative and significant relationship with the cost of debt. Regarding regionality, static panels with random and pooled effects were estimated and it was found that Brazil's macro-regions are related to the cost of debt of Brazilian companies, although there was no significance in the mesoregions of Triângulo Mineiro, Alto Paranaíba and Sul Goiano with the cost of debt. Therefore, this study contributes to the literature by providing empirical evidence on the relevance of gender diversity, board independence and lower corruption rates in ESG disclosure in emerging countries, as well as the Brazilian reality regarding ESG disclosures, since in this country, the benefits that environmental, social and governance practices provide for companies, investors, creditors, as well as all stakeholders involved, when it comes to sustainable economic and social performance, are not yet noticeable.

Purpose This paper aims to study how corporate governance and country-related contextual factors affect the relationship between board gender diversity and environmental, social and governance (ESG) disclosure in its components: governance, social and environmental. Design/methodology/approach Using ordinary least-squares and two-stage least squares (2SLS) regressions, and retrieving ESG disclosure data from Bloomberg’s database, the paper analyses a sample of European nonfinancial listed firms (1,935 firm-year observations) over the period 2014–2022. The study adopts board independence and board cultural diversity as structural and demographic board attributes that characterize the corporate governance environment in which female directors operate; the enforcement of law and gender equality as country-related institutional and cultural factors. Findings Results suggest that female directors may substitute board independence in improving ESG and governance disclosure, whilst they co-occur with board cultural diversity in increasing ESG, governance and social disclosure. Findings indicate that the enforcement of law increases the positive effect of female directors on environmental disclosure and lowers the impact on governance disclosure. Conversely, a more gender-equal environment enhances female directors’ engagement in improving governance disclosure, reducing their beneficial effect on environmental information. Originality/value This study contributes to the literature suggesting that structural and other demographic board contextual aspects, as well as institutional and cultural country-related contextual factors, affect the relationship between board gender diversity and ESG disclosure differently and the effect may vary depending on ESG disclosure.

PurposeThis study aims to examine the relationship between environmental, social and governance (ESG) disclosure, firm risk and stock market returns within the Chinese energy sector. Using a variety of econometric techniques, the study seeks to uncover the impact of ESG disclosure on risk mitigation and its influence on stock market performance.Design/methodology/approachBenchmark regression models were used to explore the associations between ESG disclosure, firm risk and stock returns. To address potential endogeneity, a generalised method of moments estimator is used. Quantile regression was used for robustness analysis.FindingsThe study reveals a negative relationship between ESG disclosure and firm risk, indicating that companies with greater ESG disclosure tend to experience reduced risk exposure. In addition, a positive association is observed between ESG disclosure and stock market returns, suggesting that companies with more comprehensive ESG disclosure practices tend to perform better in the stock market.Research limitations/implicationsThis study implies that investors appreciate sustainable investment and incorporate ESG practices and disclosure in decision-making. Policymakers can promote transparent ESG reporting through regulatory frameworks, fostering sustainable practices in the energy sector.Originality/valueDespite the mounting concerns over carbon dioxide emissions and the energy industry’s environmental footprint, this study pioneers a comprehensive analysis of ESG disclosure within this critical sector. Delving into the relationship of ESG practices, firm risk and market returns, this research uniquely examines both risk mitigation and return enhancement, shedding new light on sustainable strategies in the energy domain.

ESG practices and the cost of debt: Evidence from EU countries

A crucial nexus between sustainable finance and investment decision-making is addressed in this study, which looks at how much Environmental, Social, and Governance (ESG) disclosures affect investor behavior in international financial markets. Academic research and real-world investment strategies now depend on an understanding of how ESG factors affect investor behavior, as they have progressed from voluntary corporate social responsibility programs to mandatory regulatory requirements in major jurisdictions. The study uses a thorough framework to examine the three pillars of ESG that are environmental impact assessment, social responsibility metrics, and governance structures and how they all affect investor decision-making. This paper examines the effects of ESG disclosures on investment flows, portfolio construction, and risk assessment strategies by examining empirical evidence from international studies, including meta-analyses of more than 1,000 research studies and performance data from major financial markets. Important conclusions show that ESG disclosures have a big impact on investor behavior, but the relationship is complex and contingent on the caliber and veracity of the information provided. Although 88% of investors worldwide indicate an interest in sustainable investing, younger generations (69% of Millennials and 72% of Gen Z) have especially strong preferences, and the efficacy of ESG disclosures varies widely. Investors react more favorably to substantive ESG performance than to superficial reporting, as evidenced by studies showing that only 26% of disclosure-focused research exhibits positive financial correlation, compared to 53% for performance-based ESG metrics. ESG-aligned portfolios demonstrate greater resilience during crises like COVID-19 and the 2008 financial crash, according to the analysis, which also shows that ESG investing has asymmetric benefits, especially during market downturns. Significant obstacles still exist, though, such as disparate rating systems used by different agencies (correlation rates are only 54% compared to 99% for credit ratings), worries about greenwashing, and regulatory fragmentation among jurisdictions. This study adds to the expanding body of knowledge on sustainable finance by offering a thorough examination of how ESG disclosures influence investor behavior in a global financial system that is becoming more interconnected by the day. The results have significant ramifications for the development of regulatory policies, investment management procedures, and corporate reporting strategies. They indicate that the best way to affect investor behavior and generate long-term value is to combine real performance improvements with authentic, material ESG disclosures.

Environmental, Social and Governance (ESG) disclosure, competitive advantage and performance of firms in Malaysia

Given that stakeholders are paying more and more attention to the environmental, social, and governance (ESG) policies of firms, the objective of this paper is to study the effect of ESG disclosure on firm performance, focusing on companies involved in port activities; precisely, (i) a port company/authority, (ii) a terminal operator/stevedore, and (iii) an integrated carrier. The study contributes to the existing knowledge by incorporating ESG scores and looking at factors that indicate financial strength. The contribution of our study will lie in complementing and adding to the existing knowledge, along with further incentivizing sustainable firm performance. This study discovers that a positive relationship between ESG disclosure, firm value, and firm performance exists, as determined by market-to-book ratio and Q ratio, respectively. It considers a panel regression examination, by means of a sample of 213 publicly listed ports and considering a time period of 5 years. This study will benefit scholars, decision-makers, legislators, and stakeholders of ports through improving their comprehension of how ESG disclosure affects the performance of firms, in general and specifically for each pillar. Highlights The aim of the present study is to examine the impact of ESG (environmental, social, and governance) disclosure on the performance of firms that are engaged in port-related operations. More specifically, our focus is on three types of companies, namely, a port company/authority, a terminal operator/stevedore, and an integrated carrier The present study has found that a favorable correlation exists between ESG disclosure, firm value, and firm performance, as gauged by the market-to-book ratio and Q ratio, correspondingly The study conducts a panel regression analysis, utilizing a sample of 213 publicly listed ports over a time period of five years This study will be advantageous to scholars, decision-makers, legislators and stakeholders in the port industry, as it enhances their understanding of how ESG disclosure impacts firm performance, both globally and within each distinct pillar

This study aimed to investigate the impact of a company’s strategic posture on the relationship between stakeholder power and ESG (Environmental, Social, and Governance) disclosure. By employing multivariate panel data regression techniques, this study analysed the direct and indirect effect of strategic posture on the relationship between stakeholder power and ESG disclosure. The research relied on a panel data set comprising 71 Malaysian companies observed from 2013 to 2022. The ESG orientation score, selected as proxy of strategic posture, was derived from computer-aided textual analysis of chairpersons’ statements published in financial annual reports. The dataset also consisted of ESG disclosure scores and firm-related data from Bloomberg. The mediation analysis revealed that a company’s strategic posture significantly mediated the influence of stakeholder power on ESG disclosure. Empirical findings provide new insights on the oftenunderstudied role of external stakeholders who impact a company’s strategic orientation and, consequently, its ESG outcomes. This study provides practical guidance for decisionmakers to prioritise external ESG demands while emphasising the importance of engaging with powerful stakeholders for impactful ESG reporting. This study contributes to the literature by exploring strategic posture as a mediator in clarifying the relationship between stakeholder power and ESG within a developing country context.

This paper examines the impact of ESG (Environmental, Social and Governance) disclosure on the credit risk of commercial banks, employing the Generalized Method of Moments (GMM) approach based on a panel dataset of 27 Vietnamese commercial banks from 2018 to 2023. ESG disclosure is quantified using content analysis method, based on criteria outlined in Appendix 4 of Circular 96/2020-TT-BTC, issued by the Ministry of Finance The empirical results reveal that overall ESG disclosure, as well as the environmental (E) and governance (G) component individually, are associated with a significant reduction in credit risk, measured by the non-performing loan (NPL) ratio. In contrast, the study finds no statistically significant relationship between social (S) disclosure to credit risk. These findings contribute to the stakeholders' theory and asymmetric information theory by highlighting the risk-mitigating role of transparent ESG practices. These findings also imply that regulatory authorities should issue specific regulations on ESG disclosure and commercial banks should take a more proactive approach to integrating ESG requirements into their activities.

Crash risk and ESG disclosure

Research aims: This study investigates the effects of the investment opportunity set, prospector business strategy, and political connections on tax avoidance, with ESG disclosure playing a potential moderating role.Design/Methodology/Approach: Using an unbalanced panel of 127 observations from 32 non-financial State-owned enterprises (SOEs), listed and non-listed on the IDX, this research utilizes secondary data from financial and sustainability reports for 2019–2023. Hypothesis testing was conducted via multiple linear regression at a 10% significance level.Research findings: This study indicates that only the prospector business strategy positively influences tax avoidance, while ESG (Environmental, Social, and Governance) disclosure dampens this relationship. In contrast, the investment opportunity set and political connections do not significantly affect tax avoidance, and ESG disclosure does not strengthen nor weaken these relationships.Theoretical contribution/ Originality: This study enhances the application of stakeholder theory, highlighting how ESG disclosure aligns with the ethical and transparent behavior expected in corporate tax strategies.Practitioner/Policy implication: Effective ESG disclosures encourage companies to adopt ethical tax practices, reduce aggressive tax avoidance, and foster transparency.Research limitation/Implication: Limited data on non-listed SOEs, as only 12 firms provided comprehensive financial and sustainability reports, restricts the sample size for these entities.

ESG disclosure, public perception and corporate financial performance: An empirical study based on textual analysis.

This study examines the effect of ESG (Environmental, Social, and Governance) disclosure on the performance of real estate companies in the ASEAN-6 region, with CEO tenure as a moderating variable. Using panel data from 2016 to 2023, covering 424 observations of real estate firms listed on ASEAN-6 stock exchanges, this study employs the Random Effect Model (REM) to analyze the relationships between variables. The findings reveal that ESG disclosure has a negative and significant impact on firm performance, as measured by Tobin's Q. However, the interaction between ESG disclosure and CEO tenure exhibits a positive and significant effect. These results indicate that longer-tenured CEOs can moderate the relation-ship between ESG disclosure and firm performance. The implications of this research provide valuable insights for companies to enhance ESG transparency and consider leadership stability in optimizing long-term performance.

The goal of this study is to comprehend how local culture affects ESG (Environmental, Social, and Governance) disclosure and how culture-influenced ESG innovation can enhance corporate sustainability performance. This study uses a systematic literature review (SLR) approach with the PRISMA method to consolidate relevant studies related to the impact of culture on ESG disclosure. The results show that local culture influences ESG disclosure through social and ethical values. Aligning ESG innovation with culture and institutional support enhances sustainability performance, thereby enhancing the effectiveness of the contextual ESG framework in achieving corporate sustainability. This study emphasizes the importance of a local, culture-based ESG framework and encourages the integration of cultural values in ESG reporting and innovation to support global sustainability. This research offers a new perspective on the impact of local culture on ESG transparency, enriching the literature with a cultural approach to build a more inclusive ESG framework