Disclosure by Design: ESG Communication Gaps, Firm Valuation, and the Limits of Mandatory Harmonization

Unofficial AI-generated summary based on the public title and abstract. Not an official translation.

🔬研究者:Provides robust empirical evidence on the consequences of disclosure regulation, offering a cautionary note for harmonization-oriented policies.

🏢実務担当者:Highlights that investors may value divergence in ESG messaging across venues, informing how firms balance mandatory and voluntary disclosures.

🏛政策担当者:Suggests that mandatory standardization of ESG disclosure framing could have unintended negative effects on market efficiency; calls for evidence-based regulation.

Regulators and standard-setters, including the SEC, International Sustainability Standards Board, and EU Corporate Sustainability Reporting Directive, are increasingly mandating ESG disclosure with the goal of reducing fragmentation and curbing selective or strategically framed reporting. A central premise of these efforts is that divergence between regulated filings and voluntary disclosures signals information asymmetry requiring regulatory correction. The validity of this premise is, however, an empirical question. We introduce the ESG communication gap: a within-firm measure of how prominently firms discuss ESG risk in mandatory 10-K filings relative to voluntary earnings calls. We examine its determinants and market consequences for 1,396 U.S. public firms over 2006 to 2024. The gap is pervasive by institutional design, reflecting the different regulatory oversight, litigation exposure, and audience expectations governing each venue. Gap magnitude is driven by executive compensation incentives and disciplined by governance scrutiny: firms subject to heightened shareholder scrutiny following the Dodd-Frank Say-on-Pay mandate significantly narrowed their gaps, an inference supported by clean parallel trends and null placebo effects. Capital markets price this variation positively: larger gaps predict higher future valuations and stronger operating performance, with a convex premium and no penalty threshold even at extreme divergence. The results offer a cautionary note for harmonization-oriented regulation. Far from signaling deception or market failure, the ESG communication gap is priced as an informative signal, suggesting that mandatory standardization of ESG disclosure framing may reduce rather than enhance market efficiency by eliminating informative cross-venue variation.

• openaire https://doi.org/10.2139/ssrn.6749212first seen 2026-07-09 04:46:33