Date of Award
8-16-2024
Document Type
Open Access Dissertation
Department
Moore School of Business
First Advisor
Chad Stefaniak
Abstract
Many investors desire to integrate a company’s environmental, social, and governance (ESG) performance into their investment decisions. Accordingly, most companies now disclose at least some ESG information in annual sustainability reports. However, little regulation exists over ESG reporting, creating a well-acknowledged agency problem for investors and making trust vitally important to investment. In this study, I examine two mechanisms which may facilitate trust amongst ESG investors: Management’s ESG disclosure strategy and ESG assurance. Contrary to traditional conceptions of persuasion theory, I find ESG investors reduce investment in response to more transparent negative disclosures when the ESG report is not independently assured. However, I find management’s additional disclosure of a proposed remedy to address a shortcoming yields similar responses to disclosing positive performance information alone. Additionally, I provide evidence that the provision of voluntary assurance over the ESG report alters responses to ESG disclosures. Specifically, ESG assurance insulates organizations from reduced investment when the ESG report contains unfavorable disclosures. In supplemental analyses, I find assurance protects organizations against reduced investment in the face of negative disclosures by restoring perceptions of ESG performance and return expectations. My results have implications for both theory and practice, as they identify ESG assurance as a key to allowing transparent ESG disclosures without negatively affecting investor support.
Rights
© 2024, Macy Knutson
Recommended Citation
Knutson, M.(2024). The Effects of Management’s ESG Disclosure Strategy and Voluntary Esg Assurance on Investment Judgments. (Doctoral dissertation). Retrieved from https://scholarcommons.sc.edu/etd/7738