Social Disclosure Research Articles

Do SMEs have an ESG communication strategy? Exploring the quality and influencing factors of voluntary ESG disclosures using web‐based and annual report channels

AbstractThis paper evaluates the influencing factors and disparities between web‐based and annual report channels for environmental, social and governance (ESG) disclosures by small and medium‐sized enterprises (SMEs). In contrast to the prevalent use of case‐studies in the context of SMEs, a quantitative study was conducted by performing a content analysis of the websites and annual reports of 100 manufacturing SMEs in Italy. Based on the collected evidence, SMEs exhibited a higher level of web‐based disclosures compared to annual reports. These disclosure channels appear to be independent of each other, with financial resources significantly influencing the quality of annual reports (i.e. profitability as a proxy) and size impacting information available on websites (i.e. turnover as a proxy). Both channels may be explained by the resource‐based view, while agency characteristics (such as having a Big Four external auditor or board size) have a relevant effect on the overall voluntary ESG disclosure score.

Correction to: Social media disclosure and reputational damage

Correction to: Social media disclosure and reputational damage

Emerging Trends of Environmental Social and Governance (ESG) Disclosure Research

Emerging Trends of Environmental Social and Governance (ESG) Disclosure Research

The Impact of ESG Disclosures on Financial Performance: Evidence from ASEAN-Listed Companies

With increasing global emphasis on sustainability, corporate transparency in ESG practices has become a critical factor for investors and stakeholders. This study investigates the impact of Environmental, Social, and Governance (ESG) disclosures on the financial performance of listed companies in ASEAN countries. This research employs a dynamic Generalized Method of Moments (GMM) approach to address endogeneity concerns and assess the relationship between ESG disclosure and financial performance indicators such as return on assets (ROA), return on equity (ROE), and market value. Using panel data from ASEAN-listed firms over the period 2013-2022, the findings show that firms with strong historical performance tend to maintain profitability, while ESG disclosures positively influence financial outcomes by enhancing investor confidence and risk management. Larger firms benefit from economies of scale, while excessive leverage reduces profitability. Favorable macroeconomic conditions, such as GDP growth, also play a crucial role in boosting firm profitability. Policymakers should mandate ESG disclosure frameworks, incentivize sustainable practices, and provide financial support to smaller firms. Promoting responsible debt management and ensuring macroeconomic stability through favorable trade policies will also enhance firm profitability and long-term economic growth.

The compounding effect of mandatory GHG emissions disclosure and voluntary ESG disclosure on firm value in Korea

PurposeThis study attempts to examine the effect of greenhouse gas (GHG) emissions disclosure and its compounding effect with environmental, social, and governance (ESG) disclosure on firm value in Korea. This study focuses on the unique institutional setting in Korea that implements mandatory GHG emissions disclosure and voluntary ESG disclosure.Design/methodology/approachUsing a dataset comprising 25,968 firm-year observations from publicly listed Korean firms from 2000 to 2021, we applied an ordinary least squares (OLS) regression model to test hypotheses.FindingsThe results show that, in a voluntary disclosure regime, ESG disclosure has a positive impact, whereas in a mandatory disclosure regime, GHG emissions disclosure has a negative impact on firm value. The results also indicate that when a firm discloses both its GHG emissions and ESG performance information, the voluntary disclosure of ESG information synergistically mitigates the adverse effects of mandatory disclosure of GHG emissions information. This synergy contributes significantly to enhancing the firm’s overall value. The findings indicate that a firm can enhance its value by proactively disclosing ESG information, especially when it is compulsorily required to report GHG emissions data.Originality/valueThis study investigated the effect of corporate non-financial disclosure on firm value by shedding light on the differential attributes between voluntary and mandatory disclosures and between quantitative and qualitative information.

Research Dynamics and Frontiers of Environmental, Social, and Governance Disclosure: Bibliometric Visual Analysis Based on CiteSpace

Abstract: With the increasing global attention on sustainable development and corporate social responsibility, studying the dynamics and frontiers of Environmental, Social, and Governance (ESG) disclosure is of great significance to academia, corporate practice, and policy-making. This study employs CiteSpace for bibliometric visual analysis, utilizing methods such as keyword co-occurrence analysis, cluster analysis, and research theme evolution analysis to comparatively analyze the differences in ESG research between domestic and international contexts. The study reveals the hotspots, trends, and development directions of ESG disclosure research. The findings indicate a steady growth in the number of publications in the ESG disclosure research field, with research themes shifting from singular environmental information disclosure to a more comprehensive focus on social responsibility and governance structures. This study not only provides researchers with new perspectives, expanding and deepening the themes of ESG research, but also offers references for companies to enhance ESG disclosure and for policy-making, thus holding significant theoretical and practical implications.

How the social dimension of ESG influences CEO compensation: Role of CEO and board characteristics

AbstractThis paper examines whether social disclosures impact CEO compensation considering various CEO and board controls. By categorizing CEO‐specific attributes into CEO duality, CEO academic diversity, and insider CEO, as well as including board size and board independence as board‐specific controls, the study tests their effects on CEO compensation. This research further explores whether board gender diversity moderates the association between social disclosures and CEO compensation. The paper uses a balanced panel dataset of 67 firms extracted from the NSE Nifty 100 ESG index and applies the panel‐corrected standard error (PCSE) model as a baseline methodology. The findings revealed that the environmental, social, and governance (ESG) disclosure score significantly impacted the CEO compensation, whereas social disclosure scores assessed independently failed to create a significant association with the same. Subsequent investigation also showed a significant positive relationship between the number of female directors on the board and CEO compensation. However, female directors on the board could not amplify the firm's social disclosure practices, leading to an insignificant impact on CEO compensation. While board independence, board size, ownership structure, and CEO duality significantly affected the above relationship, insider CEO status could not. Furthermore, robustness checks using the propensity score matching (PSM) and generalized method of moments (GMM) models were also conducted to test the validity of the above results. The findings of the work offer insights to help managers, organizations, and policy planners make decisions concerning women directors, social disclosures, and CEO compensation.

ESG and firm performance: The effects of foreigners on board and export orientation

AbstractThis study investigates whether environmental, social, and governance (ESG) disclosures enhance industry‐adjusted firm performance and whether the presence of foreigners on board and export orientation affect this relationship. The Taiwan dataset from 2013 to 2020 indicates that ESG practices positively affect accounting‐ and market‐based performance (i.e., adjusted Tobin's Q and adjusted MTB ratio). However, ESG has no significant relationship with purely market‐based performance (i.e., adjusted Jensen Alpha and adjusted FF3). The results illustrate a significant joint effect of ESG with foreigners on board and export experience on accounting and market‐based performance. The findings provide deeper insight into the complex relationship between sustainability practices, ownership structures, and international businesses. Our findings remain consistent when using alternative estimation methods to account for endogeneity and selection bias.

The Influence of Environmental, Social and Governance Disclosure Concepts on the Success of Sustainable Business in Companies Listed on the Indonesian Stock Exchange in 2023 with the Implementation of Enterprise Resource Planning System as a Moderating Variable

The purpose of this research is to examine and analyze the influence of environmental disclosure, social disclosure and governance disclosure on sustainable business as proxied by Net Profit Margin (NPM) in companies listed on the Indonesia Stock Exchange in 2023 and moderated by Enterprise Resource Planning (ERP). This type of research is quantitative descriptive which uses secondary data with testing tools in the form of SPSS version 29, and the sample used was 51 companies with purposive sampling technique as the sample selection technique. The results of hypothesis testing show that environmental disclosure has a significant positive effect on sustainable business, while social disclosure has a significant negative effect and governance disclosure has a negative but not significant effect on sustainable business. Overall, this interaction is moderated by ERP. Apart from that, ERP has positive effect also been proven to be able to have a direct influence on sustainable business. Keywords: Environmental Disclosure, Social Disclosure, Governance Disclosure, Sustainable Business, Net Profit Margin, Enterprise Resource Planning System

Corporate sustainability reporting and financial performance of likelihood distress companies in Nigeria

This study explored the interplay between corporate sustainability reporting and the financial performance of likelihood distressed listed companies in Nigeria. This study employed an ex-post facto research design spanning a longitudinal period of five years (2018–2022). The sample size comprises one hundred and nineteen firms listed on the Nigerian Exchange Group (NGX), formally known as the Nigeria Stock Exchange (NSE). The study data were analysed using the random effect panel regression technique based on the outcome of the Hausman selection test. The study’s result indicated that both corporate social responsibility and economic performance exhibited a significant and positive relationship with the performance of the likelihood distressed companies implying an increase in corporate financial performance based on data extracted from the audited annual reports of the sampled firm. Surprisingly, environmental performance reporting demonstrated a negative and non-significant relationship with financial performance. Corporate governance practice displayed a positive but non-significant relationship with financial performance. Therefore, this study recommends that the management of the sampled companies should improve social responsibility and economic disclosures as they positively affect corporate financial performance. It is also recommended that companies disclose only material information especially concerning environmental sustainability performance to improve corporate financial performance.

Interplay between sustainable development and socio-economic sanctuary from a developing economy’s voluntary social disclosure

Interplay between sustainable development and socio-economic sanctuary from a developing economy’s voluntary social disclosure

IMPLEMENTATION OF CORPORATE ESG PRACTICES: INTERNATIONAL EXPERIENCE

The article discusses the implementation of environmental, social, and governance (ESG) practices in the global agribusiness sector. The aim of the research is to analyze, systematize, and generalize international experience in the implementation of corporate environmental, social, and governance practices and the formation of ESG strategies. The study presents examples of companies successfully applying ESG strategies to enhance their competitiveness and improve long-term business sustainability. It substantiates the importance of integrating ESG principles to reduce environmental impact, improve social working conditions, and ensure transparent governance at all levels. Specific examples are provided of international companies such as Unilever, Nestlé, Cargill, and Danone, which implement sustainable initiatives in reducing emissions, restoring soils, and supporting local communities. The research identifies that the demand for sustainable investments is a key factor driving the development of ESG practices at a global level. It is revealed that international organizations, such as the UN and the European Union, play a crucial role in the dissemination of ESG standards. They develop regulations and recommendations aimed at increasing reporting transparency and consistency of ESG practices globally. The EU, for example, adopted the Sustainable Finance Disclosure Regulation (SFDR), which significantly strengthened the requirements for companies regarding their environmental and social impact data disclosure. The study shows that investors increasingly prefer companies that demonstrate a high level of responsibility regarding ESG issues, as they are perceived as less risky and have more stable financial performance. Regional differences in the implementation of ESG practices were also identified: European companies more frequently adopt environmentally sustainable approaches compared to North American ones. The research on corporate ESG practices has revealed that the active integration of such principles into business strategy positively impacts companies' reputations, their ability to attract investments, and increase public trust. However, challenges, require enhanced reporting transparency and adherence to international standards, which help build trust among investors and the public.

How does market competition affect the reporting of sustainability practices? Insights from the UK and Germany

PurposeThis study tests the proprietary cost of reporting sustainability practices. It explores how market competition impacts the reporting of corporate sustainability information. Further, it examines whether the influence of market competition on sustainability reporting is affected by firm size.Design/methodology/approachIt uses two samples of the UK FTSE 350 and German Frankfurt CDAX nonfinancial firms from 2010 to 2023. The sustainability reporting scores for UK and German firms are their Environmental, Social and Governance (ESG) disclosure scores based on the Bloomberg disclosure index. The Herfindahl–Hirschman index has been utilized to measure a firm’s degree of market competition.FindingsThe results reveal that reporting sustainability practices is a negative function of the degree of market competition. Specifically, companies in highly competitive industries disclose less information about their sustainability practices, suggesting that firms view sustainability reporting as a potential source of competitive disadvantage and, therefore, choose to limit such disclosures to maintain a strategic advantage over rivals. Further, the findings reveal a negative impact of market competition on sustainability reporting among small firms. However, this effect is weak or absent among medium and large firms. The results are more observable in the liberal market economy (i.e. the UK) than in the coordinated market economy (i.e. Germany).Practical implicationsIt provides implications for policymakers and market participants to advocate for more significant policies that promote transparency and encourage companies to report their sustainability practices and performance, especially companies in highly competitive industries.Originality/valueIt provides the first evidence of how market competition influences corporate sustainability reporting, adding a deeper insight into another non-financial dimension of sustainability reporting. Likewise, it reflects the varying priorities of companies of different sizes in managing both competition and sustainability reporting. Besides, it is the first to explore this nexus in two distinct jurisdictions: the UK and Germany.

Environmental and Social Disclosure of Brazilian Banking Financial Institutions from the Perspective of the Sustainable Development Goals

Objective: The objective of this study is to investigate the determining factors that influence the disclosure of environmental and social information by the Brazilian banking sector from the perspective of the Sustainable Development Goals (SDGs), with the aim of identifying which organizational characteristics impact the level of socio-environmental disclosure. Theoretical Framework: In this topic, the main concepts and theories that underpin the research are presented. The study is based on the Theory of Legitimacy, which provides theoretical elements for socio-environmental disclosure. This theory explains management’s motivation to disclose environmental information, recognizing that organizational survival depends not only on financial success but also on the ability to maintain a social contract with society. Method: The methodology adopted for this research comprises a quantitative approach based on content analysis of sustainability reports from Brazilian banks. Data collection was carried out through the analysis of corporate disclosure reports published between 2016 and 2020. The regression model with panel data was used to analyze the influence of organizational characteristics on the dissemination of socio-environmental information from the perspective of the SDGs. Results and Discussion: The results obtained revealed that the size of the company and public control are factors that influence the disclosure of socio-environmental information regarding the SDGs. Whether or not the company owns shares on the Stock Exchange and its profitability have little impact on the amount of information disclosed about the SDGs. In the discussion section, these results are contextualized based on the theoretical framework, highlighting the implications and relationships identified. Possible discrepancies and limitations of the study are also considered in this section. Research Implications: The practical and theoretical implications of this research are discussed, providing insights into how the results can be applied or influence practices in the field of socio-environmental disclosure. These implications could encompass the banking sector, regulatory bodies, and policymakers. Originality/Value: This study contributes to the literature by deepening the knowledge about environmental disclosure in the banking sector, a topic still little explored in academic studies. The relevance and value of this research are evidenced by its potential to inform better practices and policies for socio-environmental disclosure in the banking industry.

The effect and mediating mechanism of environmental, social, and governance information disclosure on sustainable growth rate: evidence from China

The effect and mediating mechanism of environmental, social, and governance information disclosure on sustainable growth rate: evidence from China

Does Environmental, Social and Governance Disclosure Practices Promote Customer Brand Perception? The Moderating Effect of Customers’ Sustainability Responsiveness

Environmental, social and governance (ESG) aspects have garnered considerable attention in corporate management on a global scale in recent times. As a result, researchers have paid notable attention to this subject. Though numerous studies have already explored various aspects of ESG in the context of emerging economies like Bangladesh, there is limited evidence on whether ESG practices promote customer brand perception (CBP). This study measures the impact of ESG on CBP deploying structural equation modeling in an emerging economy by analyzing the responses of 450 samples in accordance with the philosophies of triple bottom line theory and signaling theory. The results indicate that sustainability responsiveness, social and environmental disclosure practices, and CBP are positively impacted. Customers’ enhanced level of sustainability responsiveness strengthens the influence of governance disclosures in choosing a brand, while weakens the impact of environmental and social disclosures. However, the study concludes there is no significant effect of governance disclosures on CBP. The findings also reveal that social issues have the strongest impact on CBP among the ESG parameters. As sustainability concerns increase, customers either demand more sustainability performance from brands or their impression of the brands declines correspondingly. The study outlines a customer’s viewpoint on the requirements of ESG and sustainability concerns, which will contribute organizations to adopt appropriate ESG strategies and address sustainability challenges to win over customers and strengthen their brand image.

The impact of environmental, social and governance disclosure on stock prices: Empirical research in Vietnam

The aims of this research is to evaluate the impact of Environmental, Social and Governance (ESG) information disclosure (using both financial and non-financial information) on stock prices of businesses in Vietnam; From there, propose recommendations to promote transparent practices and information disclosure about ESG of businesses related activities; Contribute to developing sustainable investment goals in businesses, and the financial market in general. Based on the (Ohlson, 1995) [40] valuation model, and developed by Barth and Clinch (2009) [41] the research was conducted empirically in 30 listed companies in Vietnam in the period 2019–2022. Research results based on the GLS method show that ESG positively impacts stock prices. Additionally, this paper conducted an in-depth analysis of each individual pillar and found that the environmental pillar was considered the most meaningful to market participants. However, the correlation between ESG and stock prices is weakened for environmentally sensitive businesses. This study also makes a valuable contribution to the current literature on non-financial information reporting by using manually collected data and investigating the effects of ESG reporting on market participants in the public system voluntary information disclosure system of an emerging market like Vietnam.

Corporate environmental, social, and governance information disclosure and audit governance in the context of green development

The purpose of this paper is to investigate the relationship between Environmental, Social, and Governance (ESG) disclosure and audit governance. The objective is to assess the impact of auditor team independence, auditor professional quality, and transparency of audit procedures on the quality of information disclosure, and to elucidate the role of these factors in advancing sustainable development. Research methodologies include the optimization of information disclosure text analysis using natural language processing (NLP) and text generation techniques, complemented by empirical analysis. Key findings indicate that the maximum error between NLP and manual annotation in the proportion of positive emotions in information disclosure is 0.03, and 0.06 in audit governance. The Rouge index score surpasses the 0.5 threshold, while the Perplexity value varies across three experiments, though remaining generally low. Deep learning model results reveal that auditor team independence, professional quality, and procedural transparency significantly enhance the quality of information disclosure. These findings offer crucial insights for enterprises, regulators, and investors, affirming the rationality and stability of the model, and providing valuable input for future green development strategies and decision-making processes.

Taking ESG strategies for achieving profits: a dynamic panel data analysis

PurposeThe goal is to investigate the relationship between financial performance and environmental, social and governance (ESG) indicators and disclosures for a sample of Latin American firms.Design/methodology/approachDynamic panel data regressions are used to analyze a sample of 114 companies listed on the Latin American Integrated Market, MILA (Chile, Colombia, Mexico and Peru) for the period 2011–2020. The Altman Z-score and Piotroski F-score are used as indicators of the probability of default and comprehensive financial strength. Models are developed in which the relationship between economic value added (EVA) and Jensen’s alpha are evaluated against firms’ ESG practices.FindingsA direct relationship between ESG strategies and financial performance was found. Better practices and transparency in ESG are related to lower probability of bankruptcy, greater financial strength, greater EVA and superior risk-adjusted returns.Research limitations/implicationsESG data were obtained from the Bloomberg system based on a methodology that may differ from other sources. The sample covers four Latin American countries and large corporations. Independent variables were selected for their perceived validity, given their frequent use in previous studies.Practical implicationsEvidence for company management regarding the importance of strengthening ESG practices and reporting should be part of their balanced scorecards. For investors, the results support the importance of evaluating ESG practices in asset selection.Originality/valueThe present study is the first research to present empirical evidence on the relationship between ESG scores and disclosures for MILA countries, using a comprehensive set of financial performance indicators (Altman Z-scores, Piotroski F-scores, EVA and Jensen’s alpha).

Moderating effects of country-level institutional quality and cultural dimensions on CSR-stock price crash risk relationship: a meta-analysis study

PurposeThis study uses meta-analysis to examine the relationship between corporate sustainability reporting (CSR) and stock price crash risk (SPCR) and to discern the moderating effects of country-level institutional quality and cultural dimensions on this link.Design/methodology/approachThe study used mean correlation coefficients to test the relationship between CSR and SPCR and meta-regressions to test the moderating effects. The analysis considers 65 effect sizes from 24 empirical studies.FindingsThe results showed that CSR reduces the chances of SPCR. The inverse relationship between CSR and SPCR is stronger in masculine, high power distance and long-term oriented cultures and is less pronounced in individualistic, uncertainty avoidance and indulgent cultures. The inverse relationship is also stronger in countries where high-quality institutions exist.Research limitations/implicationsThis study is based on correlation coefficient analysis and excludes studies publishing only regression results. Furthermore, it provides guidance to lessen SPCR. Findings suggest that such initiatives may mitigate the risk of stock price crashes for firms. Through meta-analysis, this research investigates the correlation between environmental, social and governance (ESG) disclosure and stock price crash occurrences, offering insights with significant implications for the European financial landscape and globally.Originality/valueThis is a pioneer meta-analysis that investigates the link between CSR and SPCR and the moderating effects of country-level institutional quality and cultural dimensions. Our study sheds light on the potential impact of promoting a sustainable and responsible business environment in Europe through comprehensive ESG disclosure under the Corporate Sustainability Reporting Directive (CSRD).