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Common ownership and investor‐focused disclosure: Evidence from ESG financial materiality

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  • Eduardo Schiehll
  • Sam Kolahgar

Abstract

In this study, we investigate whether information demands made by common agents, specifically common institutional owners, drive firms to adopt a reporting framework that enhances the comparability and financial materiality of environmental, social, and governance information. Using a sample of 3659 unique US firms from 2015 to 2021, we collected data on the adoption of the Sustainability Accounting Standards Board's reporting framework—identifying first movers, followers, and non‐adopting firms—and their levels of common institutional ownership. Our results are robust across changes in the levels of common institutional ownership, various combinations of fixed effects, and the application of an instrumental variable approach. Our findings support the idea that investors' demand drives comparability and financial materiality in sustainability reporting and that common ownership enhances such disclosure by alleviating the concern over the proprietary costs of revealing sensitive information. Our study offers new insights into patterns of intra‐industry disclosure behavior and a better understanding of how a group of increasingly significant market participants (i.e., common institutional owners) influences firms' commitment to investor‐focused disclosure.

Suggested Citation

  • Eduardo Schiehll & Sam Kolahgar, 2025. "Common ownership and investor‐focused disclosure: Evidence from ESG financial materiality," Business Strategy and the Environment, Wiley Blackwell, vol. 34(1), pages 497-515, January.
    • Handle: RePEc:bla:bstrat:v:34:y:2025:i:1:p:497-515
    DOI: 10.1002/bse.4002
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    Cited by:

    1. Li, Ying & Zhao, Chen, 2025. "From shared stakeholders to strategic linkages: The impact of common ownership on supply chain diversification," Research in International Business and Finance, Elsevier, vol. 80(C).
    2. Farah Sraj & Eduardo Schiehll, 2025. "Tracing the Shifting Materiality of ESG Issues: Insights from Media Attention," Sustainability, MDPI, vol. 17(16), pages 1-25, August.
    3. Ulla Bauer, 2025. "Disclosure determinants in corporate reporting: Testing the significance of financial and pension variables," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 14(10), pages 174-183, December.

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