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The fundamental effects of ESG disclosure quality in boosting the growth of ESG investing

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  • Wen, Hui
  • Ho, Ken C.
  • Gao, Jijun
  • Yu, Li

Abstract

This paper investigates the link between firms’ ESG disclosure quality and the growth of ESG investment based on a cross-country/region firm-level panel dataset. We find evidence supporting moderating effects of ESG disclosure quality on increasing firms’ Tobin’s Q, ROA, and reducing downside risks. ESG disclosure quality has a larger effect on enlarging the ESG investment scale, accelerating the growth of ESG investing and promoting the ESG investment more dispersed among all firms in mandatory CSR reporting countries/regions compared with other countries/regions. Our findings also suggest the importance of good and continuing good ESG disclosure quality for firms to benefit from implementing ESG practices.

Suggested Citation

  • Wen, Hui & Ho, Ken C. & Gao, Jijun & Yu, Li, 2022. "The fundamental effects of ESG disclosure quality in boosting the growth of ESG investing," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 81(C).
    • Handle: RePEc:eee:intfin:v:81:y:2022:i:c:s1042443122001275
    DOI: 10.1016/j.intfin.2022.101655
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    Cited by:

    1. Fengxue Yin & Yanling Xiao & Rui Cao & Jianhua Zhang, 2023. "Impacts of ESG Disclosure on Corporate Carbon Performance: Empirical Evidence from Listed Companies in Heavy Pollution Industries," Sustainability, MDPI, vol. 15(21), pages 1-19, October.
    2. Kudryashov, Alexander, 2023. "ESG Transformation: A Roadmap for Russia’s Sustainable Development /– Tallinn : OPEN EUROPEAN ACADEMY OF PUBLIC SCIENCES OÜ, 2023," OSF Preprints 6j8ux, Center for Open Science.
    3. Birong Huang & Zilong Wang & Yuan Gu, 2023. "ESG Investment Scale Allocation of China’s Power Grid Company Using System Dynamics Simulation Modeling," IJERPH, MDPI, vol. 20(4), pages 1-16, February.
    4. Jiajia Liu & Zhenzhen Ge & Yahan Wang, 2024. "Role of environmental, social, and governance rating data in predicting financial risk and risk management," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(1), pages 260-273, January.
    5. Jin Wang & Zihan Hong & Hai Long, 2023. "Digital Transformation Empowers ESG Performance in the Manufacturing Industry: From ESG to DESG," SAGE Open, , vol. 13(4), pages 21582440231, October.
    6. Xiyan Gu & Yingjun Zhu & Jingxia Zhang, 2023. "Toward sustainable port development: an empirical analysis of China’s port industry using an ESG framework," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-14, December.

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    More about this item

    Keywords

    ESG disclosure; ESG investing; CSR reporting regulation; Market value; Financial returns; Downside risk;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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