Navigating transparency: The interplay of ESG disclosure and voluntary earnings guidance
研究发现美国上市公司ESG披露水平越高，信息不对称越严重，企业因此更可能发布自愿盈利指引来抵消负面影响，这对投资者和监管者理解ESG披露的透明度效应有参考价值。
In accordance with stakeholders' theory and the reputation-building hypothesis, environmental, social and governance (ESG) disclosure and voluntary earnings guidance are important ways of enhancing a firm's transparency. Using data of U.S. publicly listed companies from 2002 to 2021, we find that the level of ESG disclosure (measured with Bloomberg and machine learning (ML) ESG disclosure scores) is associated with increased information asymmetry. A subsequent examination reveals a positive relation between ESG disclosure levels and earnings guidance. The result holds in a robustness test of quasi-exogenous event of the initiation of the Bloomberg ESG disclosure coverage of firms. We deduce that firms are using voluntary earnings guidance to counterbalance the adverse impact of ESG disclosure on transparency. The study provides new insights on the factors that determine voluntary earnings guidance through firms' involvement in ESG disclosure. • ESG disclosure is positively linked to information asymmetry, challenging that ESG transparency reduces information gaps. • Firms with higher ESG disclosure are more likely to issue earnings guidance to address increased information asymmetry. • Each ESG pillar (environmental, social, governance) is positively linked to the likelihood of issuing voluntary earnings guidance. • ESG disclosure has no significant effect on market reactions to earnings guidance as investors struggle to interpret ESG data.