{"title":"Decoding ESG disclosure: unveiling the role of catering incentives","authors":"King Fuei Lee","doi":"10.1057/s41310-024-00245-4","DOIUrl":null,"url":null,"abstract":"<p>This paper introduces a catering hypothesis of ESG disclosure, where managers adjust their disclosure policies based on investor valuation of high-disclosure companies. The study examines 2207 US-listed firms from 2005 to 2022 and finds a significant positive relationship between the ESG disclosure premium and firm ESG reporting. Managers respond to prevailing investor demand for ESG data by disclosing more when investors place a stock price premium on companies with high disclosure levels and disclosing less when investors prefer companies with low disclosure levels. This research enriches sustainability accounting literature by exploring the impact of managerial decision-making and investor demand on ESG disclosure, providing insights for stakeholders and policy development. It also expands understanding of the connection between corporate policy, sustainability, and catering considerations, benefiting stakeholders, directors, and investors interested in improving ESG practices and capital allocation for sustainable development.</p>","PeriodicalId":45050,"journal":{"name":"International Journal of Disclosure and Governance","volume":null,"pages":null},"PeriodicalIF":2.9000,"publicationDate":"2024-05-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"International Journal of Disclosure and Governance","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.1057/s41310-024-00245-4","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q2","JCRName":"MANAGEMENT","Score":null,"Total":0}
引用次数: 0
Abstract
This paper introduces a catering hypothesis of ESG disclosure, where managers adjust their disclosure policies based on investor valuation of high-disclosure companies. The study examines 2207 US-listed firms from 2005 to 2022 and finds a significant positive relationship between the ESG disclosure premium and firm ESG reporting. Managers respond to prevailing investor demand for ESG data by disclosing more when investors place a stock price premium on companies with high disclosure levels and disclosing less when investors prefer companies with low disclosure levels. This research enriches sustainability accounting literature by exploring the impact of managerial decision-making and investor demand on ESG disclosure, providing insights for stakeholders and policy development. It also expands understanding of the connection between corporate policy, sustainability, and catering considerations, benefiting stakeholders, directors, and investors interested in improving ESG practices and capital allocation for sustainable development.
期刊介绍：
The International Journal of Disclosure and Governance publishes a balance between academic and practitioner perspectives in law and accounting on subjects related to corporate governance and disclosure. In its emphasis on practical issues, it is the only such journal in these fields. All rigorous and thoughtful conceptual papers are encouraged.
To date, International Journal of Disclosure and Governance has published articles by a former general counsel and a former commissioner of the SEC, practitioners from Cleary Gottlieb, Skadden Arps, Wachtell Lipton, and Latham & Watkins as well as articles by academics from Harvard, Yale and NYU. The readership of the journal includes lawyers, accountants, and corporate directors and managers.
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