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Walk well and talk well: Impact of the consistency of ESG performance and disclosure on firms’ stock price crash risk

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  • Huang, Jun
  • Li, Yun
  • Han, Feifei

Abstract

The debate on whether it is possible for firms to do well by doing good in either ESG performance or disclosure is still ongoing. Investigating the consequences of firms’ outstanding status in both their actions and words may provide some new insights into this debate. This study investigates how the consistency of ESG performance and information disclosure affects the corporate stock price crash risk. We find that the consistency of ESG and its three separate dimensions negatively affects the corporate stock price crash risk. ESG consistency contributes to lower stock price crash risk through the mechanisms of alleviating agency problems and increasing information transparency. Moreover, this negative relationship is pronounced for firms operating in environmentally sensitive industries and provinces with greater public environmental attention.

Suggested Citation

  • Huang, Jun & Li, Yun & Han, Feifei, 2024. "Walk well and talk well: Impact of the consistency of ESG performance and disclosure on firms’ stock price crash risk," International Review of Economics & Finance, Elsevier, vol. 93(PA), pages 1154-1174.
    • Handle: RePEc:eee:reveco:v:93:y:2024:i:pa:p:1154-1174
    DOI: 10.1016/j.iref.2024.03.067
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