From disclosure to discrepancy: How open government data alters ESG rating divergence

Abstract

Given the impact of environmental, social, and governance (ESG) rating divergence on sustainable practices, its antecedents have garnered increasing attention. In the context of growing demands for transparency from investors and policymakers, the effect of open government data (OGD) policies on ESG rating divergence remains underexplored. To address this gap, this study examines the dynamic relationship between OGD policies and ESG rating divergence. Using panel data from Chinese listed firms and employing a difference-in-differences approach, the analysis reveals that OGD policies significantly exacerbate ESG rating divergence in the short term, with pronounced effects observed among firms subject to mandatory disclosure requirements and those with state ownership. However, over time, OGD policies reduce the ESG rating divergence. By offering a dynamic analysis, this research contributes to the literature on OGD policies and ESG assessment by underscoring the role of city-level policies in driving institutional change, thereby enhancing our understanding of ESG variability and public policy impacts.