Can Industry-Specific Information Disclosure Guidelines Alleviate Corporate ESG Divergence? Evidence from Chinese List Companies

Environmental, social, and governance (ESG) ratings are important for measuring enterprises' sustainable development performance. Disagreements between different rating agencies concerning ESG ratings can affect stakeholders' investment decisions, impacting capital market and resource allocation efficiency. This paper uses data of listed companies from 2015 to 2021 and, based on the quasi-natural experiment of China's Industry-specific Information Disclosure Guidelines (IIDGs), constructs a multi-period Difference-in-Differences (DID) model to explore the impact of the new IIDG model in the capital market on divergences in corporate ESG ratings and its underlying mechanisms. Results reveal that IIDGs can significantly reduce enterprises' ESG ratings divergence, and subsequent robustness tests support this conclusion. Mechanism analysis indicates that this effect is primarily achieved by enhancing the information disclosure effect and mitigating the rater effect. Further analysis reveals that third-party institutions' verification of corporate social responsibility reports helps IIDGs reduce enterprises' ESG ratings divergence. Heterogeneity analysis demonstrates that due to enterprises' differing emphasis on environmental and sustainable development information, IIDGs have a more significant effect in reducing ESG ratings divergence for those that disclose environmental and sustainable development reports. However, IIDGs achieve a more significant effect in reducing ESG ratings divergence for enterprises audited by one of the Big Four accounting firms, considering financial information audited by them are considered more trustworthy. This study demonstrates that the industry-specific information disclosure regulatory framework significantly reduces ESG ratings divergence and provides valuable insights for designing information disclosure regulatory models to address ESG ratings divergence.