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Uncertainty is a panacea or a poison? Exploring the effect of economic policy uncertainty on corporate environmental, social and governance disclosure

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  • Lei Huang
  • Haidong Li
  • Shanyong Wang

Abstract

Economic policy uncertainty (EPU) has a significant effect on firm decisions, especially corporate environmental, social and governance (ESG) disclosure. This research examines the impact of EPU on corporate ESG disclosure, and tests whether this effect can be influenced by financing constraints and internal control using a sample of A-share listed firms in China from 2011 to 2019. The empirical results show that EPU positively affects corporate ESG disclosure. The positive impact of EPU on ESG disclosure is stronger at higher levels of financing constraints and internal control. The heterogeneity analysis further reveals that the positive effect of EPU on corporate ESG disclosure is more significant in state-owned enterprises, heavily polluting firms and those with a higher degree of marketization and industry competition. In times of rising EPU, firms will actively disclose ESG information to mitigate business management risks and reduce negative economic benefits.

Suggested Citation

  • Lei Huang & Haidong Li & Shanyong Wang, 2024. "Uncertainty is a panacea or a poison? Exploring the effect of economic policy uncertainty on corporate environmental, social and governance disclosure," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 67(14), pages 3528-3551, December.
    • Handle: RePEc:taf:jenpmg:v:67:y:2024:i:14:p:3528-3551
    DOI: 10.1080/09640568.2023.2225735
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