Li, Ruiqian and Wu, Haiyun and Zhong, Ma and Lan, Hao (2024) Strategic tone management in ESG reports and ESG risk. International Review of Financial Analysis, 96A. p. 103618. DOI https://doi.org/10.1016/j.irfa.2024.103618
Li, Ruiqian and Wu, Haiyun and Zhong, Ma and Lan, Hao (2024) Strategic tone management in ESG reports and ESG risk. International Review of Financial Analysis, 96A. p. 103618. DOI https://doi.org/10.1016/j.irfa.2024.103618
Li, Ruiqian and Wu, Haiyun and Zhong, Ma and Lan, Hao (2024) Strategic tone management in ESG reports and ESG risk. International Review of Financial Analysis, 96A. p. 103618. DOI https://doi.org/10.1016/j.irfa.2024.103618
Abstract
In this study, we investigate whether strategic tone management in environmental, social, and governance (ESG) reports can serve as an indicator of future ESG risk. Our baseline results reveal a positive association between abnormal positive tone in ESG reports and future ESG risk. The findings suggest that firms employ impression management strategy in their ESG reports to provide misleading information. Analyst coverage and media attention can mitigate this positive association. Heterogeneity analysis reveals that the positive correlation is stronger for firms mandated to disclose ESG reports and those adhering to the Global Reporting Initiative guidelines. Additional tests indicate that abnormal positive tone is positively associated only with future environmental risk, not with future social and governance risk. We observe this positive association exclusively in government-reported ESG risk, not in media-reported ESG risk. Our results offer valuable implications for mitigating the adverse impact of strategic tone management on corporate sustainability practices.
Item Type: | Article |
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Uncontrolled Keywords: | Abnormal positive tone; Environmental; social; and governance risk; Impression management theory |
Divisions: | Faculty of Social Sciences Faculty of Social Sciences > Essex Business School |
SWORD Depositor: | Unnamed user with email elements@essex.ac.uk |
Depositing User: | Unnamed user with email elements@essex.ac.uk |
Date Deposited: | 04 Oct 2024 14:44 |
Last Modified: | 30 Oct 2024 21:27 |
URI: | http://repository.essex.ac.uk/id/eprint/39284 |
Available files
Filename: 0911-Main document-clean version.pdf
Licence: Creative Commons: Attribution-Noncommercial-No Derivative Works 4.0
Embargo Date: 27 March 2026