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The Role of Catering Incentives in ESG Disclosure

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  • Lee, King Fuei

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.

Suggested Citation

  • Lee, King Fuei, 2023. "The Role of Catering Incentives in ESG Disclosure," MPRA Paper 120930, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:120930
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    File URL: https://mpra.ub.uni-muenchen.de/120930/1/MPRA_paper_120930.pdf
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    File URL: https://mpra.ub.uni-muenchen.de/121508/9/Upload%20ESG%20Disclose%20Catering.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    ESG disclosure; ESG reporting; sustainability reporting; catering incentives; catering effects; disclosure premium;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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