Transparency and the Visibility of Misconduct: Evidence from ESG Disclosure Mandates

Erdinc Akyildirim, Giray Gozgor, Thang Ho and Alexander F. Wagner

No 21190, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Mandatory disclosure is commonly intended to deter corporate misconduct by increasing transparency. We examine an alternative channel: disclosure may primarily change the likelihood that misconduct becomes detectable. Exploiting staggered introductions of ESG disclosure mandates across 53 countries, we study how regulation affects the observed incidence of misleading ESG communications identified by external monitors. Following mandate adoption, the number of detected incidents increases significantly. The rise is concentrated in areas with stronger scrutiny, among larger and more visible firms, in countries with higher institutional quality, and where media and civil society oversight are more effective. Moreover, capital markets react more negatively to incidents after disclosure becomes mandatory, particularly when claims are more verifiable. Together, the evidence indicates that disclosure reforms enhance the observability and credibility of ESG information, enabling outsiders to uncover misrepresentation rather than preventing it. Our findings highlight that transparency regulation can raise reported misconduct even as it improves accountability.

Keywords: Greenwashing; Detection; Information environment; Regulatory enforcement (search for similar items in EconPapers)
JEL-codes: G14 G38 M41 Q56 (search for similar items in EconPapers)
Date: 2026-02
References: Add references at CitEc
Citations:

Downloads: (external link)
https://cepr.org/publications/DP21190 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:21190

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP21190

Access Statistics for this paper

More papers in CEPR Discussion Papers from Centre for Economic Policy Research 33 Great Sutton Street, London EC1V 0DX, UK.
Bibliographic data for series maintained by CEPR ().