The Effects of Mandatory ESG Disclosure around the World

The Effects of Mandatory ESG Disclosure around the World

Philipp Krueger, Zacharias Sautner, Dragon Yongjun Tang, Rui Zhong

Series number :

Serial Number: 
754/2021

Date posted :

May 06 2021

Last revised :

May 25 2021
SSRN Share

Keywords

  • Sustainability reports; ESG reporting; Nonfinancial information; ESG incidents

We examine the effects of mandatory ESG disclosure around the world using a novel dataset. Mandatory ESG disclosure increases the availability and quality of ESG reporting, especially among firms with low ESG performance.

Mandatory ESG reporting has in turn beneficial effects on firm’s information environment: analysts’ earnings forecasts become more accurate and less dispersed after ESG disclosure becomes mandatory. On the real side, negative ESG incidents become less likely, and stock price crash risk declines, after mandatory ESG disclosure is enacted. These findings suggest that mandatory ESG disclosure has beneficial informational and real effects.

Authors

Real name:
Dragon Yongjun Tang
Real name:
Rui Zhong