Silent but deadly: Political corruption and voluntary ESG disclosure in the United States

Abstract

This paper investigates the impacts of political corruption and carbon risk on corporate Environmental, Social, and Governance (ESG) disclosure. As there has not been a law to enforce ESG disclosure in the United States, ESG disclosure remains on a voluntary basis regardless of the growing attention from market participants and society. Using a sample of US listed firms and state‐level corruption data during 2005–2018, the study shows that political corruption affects voluntary ESG disclosure. The empirical results reveal that heavy‐polluter firms benefit from local corruption and less likely to voluntarily disclose their ESG performance compared to their counterparts.