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ESG-related comment letters and ESG rating disagreement

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  • Li, Ruiqian
  • Tang, Xiaoxuan
  • Li, Muyao

Abstract

Grounded on deterrence theory, this study adopts textual analysis to identify comment letters related to environmental, social, and governance (ESG) issues and explores whether and how these letters influence ESG rating disagreement, using data from Chinese A-share listed companies from 2018 to 2023. Our findings indicate that ESG-related comment letters effectively reduce ESG rating disagreement, with consistent results even after conducting various robustness tests. Moreover, the quality of ESG information disclosure can weaken the inhibitory effect of ESG-related comment letters on ESG rating disagreement, confirming an information substitution effect. In contrast, greater institutional ownership amplifies the inhibitory effect of ESG-related comment letters, supporting a supervisory complementary effect. Heterogeneity analysis indicates that the impact of ESG-related comment letters on reducing ESG rating disagreement is particularly significant among state-owned enterprises, firms receiving high media attention, and those operating in highly competitive industries. Additional analysis shows that ESG-related comment letters have a significant negative effect on environmental and social rating disagreement, whereas their impact on governance rating disagreement is positive. This study offers novel insights into strategies for reducing ESG rating disagreement.

Suggested Citation

  • Li, Ruiqian & Tang, Xiaoxuan & Li, Muyao, 2025. "ESG-related comment letters and ESG rating disagreement," Economic Analysis and Policy, Elsevier, vol. 88(C), pages 947-970.
    • Handle: RePEc:eee:ecanpo:v:88:y:2025:i:c:p:947-970
    DOI: 10.1016/j.eap.2025.10.014
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