Cost of Vagueness: Stakeholders’ Responses to Firms’ ESG Information

Hongbo He (), Yiqing Chen (), Ruiqi Guo (), Lerong He () and Hong Wan ()
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Hongbo He: Hunan University, Business School
Yiqing Chen: Hunan University, Business School
Ruiqi Guo: Hunan University, Business School
Lerong He: State University of New York at Geneseo, School of Business
Hong Wan: State University of New York at Oswego, School of Business

Journal of Business Ethics, 2025, vol. 202, issue 3, No 6, 543-566

Abstract: Abstract This paper examines the reactions of stakeholders to firms’ ESG information and how these reactions impact firms’ financial performance. We further explore how firms’ ESG performance and public attention moderate these relationships. Using a longitudinal dataset of Chinese listed firms from 2014 to 2023, we find that firms with vague ESG information are associated with increased financing constraints, diminished brand value, and reduced government environmental subsidies. Interestingly, these negative consequences are milder in firms with unusually poor ESG performance. Our findings also reveal that stakeholders’ adverse responses deteriorate these firms’ future performance. Moreover, public attention as an information intermediary is a double-edged sword: heightened public scrutiny alleviates stakeholders’ negative reactions to vague ESG information but intensifies them when a firm’s ESG performance is extremely poor. These results remain robust across alternative measures, models, and sample selection treatments. Overall, our study demonstrates that vague ESG information elicits adverse responses from stakeholders and weakens firm performance. These effects, however, are contingent upon a firm’s ESG performance and the level of public attention it receives.

Keywords: ESG information; Stakeholders’ responses; ESG performance; Financial performance; Public attention (search for similar items in EconPapers)
JEL-codes: D21 M14 M41 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s10551-025-06001-0

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