ESG news, stock volatility and tactical disclosure

Paola De Vincentiis

Research in International Business and Finance, 2024, vol. 68, issue C

Abstract: Against the backdrop of the increasing importance of ESG investing, our goal is to explore whether ESG-related disclosure timing is tactically managed by listed companies. An international comparison is undertaken on a sample of 199 blue-chips listed firms, located in Europe, Usa and Asia. Using a dataset of 29.724 ESG news over a period of 6 years (2015–2020), we evaluate the disclosure determinants using a Probit model. We find that the probability of negative ESG news disclosure is lower when the stock is experiencing higher returns volatility. This evidence suggests that managers refrain from fuelling market instability and eroding firm’s reputation capital with the disclosure of bad ESG news, adopting a type of hoarding behaviour. Similarly, managers tend to boost positive ESG-related information when the returns volatility is higher, even though the evidence is milder than for bad news. Our findings highlight that the degree of transparency on ESG matters remains incomplete and there are spaces for tactical disclosure. Concerned investors should be aware that their information on sustainability matters might be biased, especially in times of higher volatility.

Keywords: ESG news; Volatility; Disclosure (search for similar items in EconPapers)
JEL-codes: G12 G14 G41 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:68:y:2024:i:c:s0275531923003136

DOI: 10.1016/j.ribaf.2023.102187

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