Scandinavian Working Papers in Economics

Misum Working Paper Series,
Stockholm School of Economics, Mistra Center for Sustainable Markets (Misum)

No 2022-5: Mandatory ESG Reporting and Corporate Performance

Antonio B. Vazquez () and Sofia Martinez ()
Additional contact information
Antonio B. Vazquez: Mistra Center for Sustainable Markets (Misum), Postal: Stockholm School of Economics, P.O. Box 6501, SE-113 83 Stockholm, Sweden
Sofia Martinez: Stockholm School of Economics, Postal: Stockholm School of Economics, P.O. Box 6501, SE-113 83 Stockholm, Sweden

Abstract: We examine the effects of an ESG reporting mandate on firms’ corporate performance. Exploiting discontinuous ESG reporting requirements assigned to otherwise similar small and large-sized private firms, we document that ESG reporting increases firms’ corporate performance. Our evidence suggests that the mandate helps firms establishing a credible commitment with employees and customers, which allows them to enjoy higher performance. Our results are robust to a matched sample, a mixed difference-in-differences and regression discontinuity setting and to the use of alternative thresholds of ESG reporting. We contribute to the literature by providing evidence that suggests private firms benefit from reporting non-financial information.

Keywords: private firms; mandatory ESG reporting; regression discontinuity design; difference-in-differences design

JEL-codes: G38; K22; M14; M41; M48

Language: English

52 pages, January 10, 2022

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