Publication Type
Working Paper
Version
publishedVersion
Publication Date
9-2023
Abstract
In this paper, we provide the first large-sample empirical analysis of the consequences of ESG reporting divergence among U.S. firms. We construct and validate an ESG reporting divergence measure based on the dissimilarities in ESG reporting across firms. Validation tests confirm that it is lower for firm-pairs using the same ESG reporting framework, with similar size, and with similar ESG performance than for other firm-pairs. We find that ESG reporting divergence is positively associated with ESG rating disagreement and weakens the positive association between ESG ratings and ESG fund allocation. These results indicate that ESG reporting divergence reduces the usefulness of ESG reporting for ESG rating providers and ESG fund managers. We corroborate our findings using a sample of U.S. firms that are likely affected by the EU’s ESG reporting regulation.
Keywords
ESG reporting divergence, ESG rating disagreement, ESG fund, Regulation, Sustainability reporting, Global reporting initiative
Discipline
Accounting | Corporate Finance
Research Areas
Corporate Reporting and Disclosure
First Page
1
Last Page
62
Identifier
10.2139/ssrn.4565408
Publisher
SMU School of Accountacy Research Paper
City or Country
Singapore
Citation
CHENG, Qiang; LOU, Yun; and YANG, Mengjie.
ESG reporting divergence. (2023). 1-62.
Available at: https://ink.library.smu.edu.sg/soa_research/2032
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.2139/ssrn.4565408