The Impact of Mandatory ESG Disclosure on Share Price

Abstract

Listen

Translate article

Abstract: The importance of sustainable development has attracted public attention. To achieve the global sustainable development goals, copious countries have recently begun formulating and implementing mandatory ESG (Environment, Social and Governance) disclosure policies. This has prompted the research community to investigate the impact of compulsory disclosure on the interests of corporate stakeholders, such as share price. According to stakeholder theory, long-term value-based theory, resource-based theory, and efficient market hypothesis, ESG mandatory disclosure will have short-term and long-term impacts on stock prices. Specifically, from the short-term perspective, good ESG reports will lead to rapid growth. Then the price will return to normal level. Moreover, in the long term, this has no significant impact on share prices. This article will use event research methods and linear regression models to specifically study the impact of Apple's ESG report disclosure on stock prices. Finally, research has found that in a normal environment, mandatory ESG disclosure will have a positive short-term impact on share price according to the good quality of ESG reports, while this will have a negative influence on stock price due to the poor quality of ESG reports. However, in special circumstances such as the 2022-2022 global epidemic period and long-term perspective, the disclosure of ESG reports has no significant impact on stock prices.