The Role of Catering Incentives in ESG Disclosure

King Fuei Lee

MPRA Paper from University Library of Munich, Germany

Abstract: This paper introduces a catering hypothesis of ESG disclosure, where managers adjust their disclosure policies based on investor valuation of high-disclosure companies. The study examines 2,207 US-listed firms from 2005-2022, and finds a significant positive relationship between the ESG disclosure premium and firm ESG reporting. Managers respond to prevailing investor demand for ESG data by disclosing more when investors place a stock price premium on companies with high disclosure levels and disclosing less when investors prefer companies with low disclosure levels. This research enriches sustainability accounting literature by exploring the impact of managerial decision-making and investor demand on ESG disclosure, providing insights for stakeholders and policy development. It also expands understanding of the connection between corporate policy, sustainability, and catering considerations, benefiting stakeholders, directors, and investors interested in improving ESG practices and capital allocation for sustainable development.

Keywords: ESG disclosure; ESG reporting; sustainability reporting; catering incentives; catering effects; disclosure premium (search for similar items in EconPapers)
JEL-codes: M41 Q5 Q56 (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-acc, nep-env and nep-mac
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https://mpra.ub.uni-muenchen.de/120930/1/MPRA_paper_120930.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/121508/9/Upload%20ESG%20Disclose%20Catering.pdf revised version (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:120930

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