 The Opaque Scorecard: Environmental, Social and Financial Information During a CrisisSerhat Hasancebi and Mircea Epure No 1543, Working Papers from Barcelona School of Economics Abstract: We show that firms with higher environmental and social (ES) engagement exhibited lower financial reporting quality (FRQ) during the COVID-19 crisis—a pattern not observed in the pre-crisis period. We argue that this decline can be driven by increased complexity and reduced monitoring effectiveness under crisis- induced uncertainty. The result is robust across different ES measures, including ES scores and (social) media sentiment, and holds under both standard and synthetic difference-in-differences approaches. The effect is more pronounced in contexts with greater government intervention via income support and debt relief, policies that may have added to reporting complexity. At the firm level, the decline in FRQ is stronger among firms with weaker governance or management practices—specifically when the CEO pay is not linked to shareholder returns or that of senior executives to sustainability ob jectives, and with lower strategic or institutional ownership. We identify potential channels for the decline in FRQ, such as increased variation in depreciation and amortization expenses, intangible assets, R&D spending, inventories, and labor costs during the crisis Keywords: crisis; environmental circumscription; financial reporting quality; governance; social (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bge:wpaper:1543 Access Statistics for this paper More papers in Working Papers from Barcelona School of Economics Contact information at EDIRC. |
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