The DOI matches its Crossref record; 37 of the 37 references it cites were found in a registry or an index.
Why is Corporate Virtue in the Eye of The Beholder? The Case of ESG Ratings
Open accessAbstract
Despite the rising use of environmental, social, and governance (ESG) ratings, there is substantial disagreement across rating agencies regarding what rating to give to individual firms. As what drives this disagreement is unclear, we examine whether a firm's ESG disclosure helps explain some of this disagreement. We predict and find that greater ESG disclosure actually leads to greater ESG rating disagreement. These findings hold using firm fixed effects and using a difference-in-differences design with mandatory ESG disclosure shocks. We also find that raters disagree more about ESG outcome metrics than input metrics (policies), and that disclosure appears to amplify disagreement more for outcomes. Last, we examine consequences of ESG disagreement and find that greater ESG disagreement is associated with higher return volatility, larger absolute price movements, and a lower likelihood of issuing external financing. Overall, our findings highlight that ESG disclosure generally exacerbates ESG rating disagreement rather than resolves it. Data Availability: The data used in this study are publicly available from the sources cited in the text. JEL Classifications: G24; M14; M41; Q56.
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Cites
A Simple Model of Capital Market Equilibrium with Incomplete Information
MERTON, R. C. (1987) · The Journal of Finance · doi:10.1111/j.1540-6261.1987.tb04565.x · Cited by 5,811
Epistemic Cultures: How the Sciences Make Knowledge
Knorr Cetina, K. (1999) · Harvard University Press eBooks · doi:10.4159/9780674039681 · Cited by 3,956
Corporate social responsibility and access to finance
Cheng, B., Ioannou, I., & Serafeim, G. (2014) · Strategic Management Journal · doi:10.1002/smj.2131 · Cited by 3,896
Self-citationAggregate Confusion: The Divergence of ESG Ratings
Berg, F., Kölbel, J. F., & Rigobon, R. (2022) · Review of Finance · doi:10.1093/rof/rfac033 · Cited by 3,444
Delmas, M. A., & Burbano, V. C. (2011) · California Management Review · doi:10.1525/cmr.2011.54.1.64 · Cited by 3,441
Limited attention, information disclosure, and financial reporting
Hirshleifer, D., & Teoh, S. H. (2003) · Journal of Accounting and Economics · doi:10.1016/j.jacceco.2003.10.002 · Cited by 2,324
Commensuration as a Social Process
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Corporate Sustainability: First Evidence on Materiality
Khan, M., Serafeim, G., & Yoon, A. (2016) · The Accounting Review · doi:10.2308/accr-51383 · Cited by 1,959
Self-citationToward a Comparative Sociology of Valuation and Evaluation
Lamont, M. (2012) · Annual Review of Sociology · doi:10.1146/annurev-soc-070308-120022 · Cited by 1,492
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Cited by
Aggregate Confusion: The Divergence of ESG Ratings
Berg, F., Kölbel, J. F., & Rigobon, R. (2022) · Review of Finance · doi:10.1093/rof/rfac033 · Cited by 3,444
Mandatory CSR and sustainability reporting: economic analysis and literature review
Christensen, H. B., Hail, L., & Leuz, C. (2021) · Review of Accounting Studies · doi:10.1007/s11142-021-09609-5 · Cited by 1,923
“For instance, Christensen et al. (2021) find that ESG disclosures generally exacerbate rather than resolve ESG rating disagreement and that this disagreement is associated with higher price volatility and a lower likelihood of external financing.”
BackgroundThe Pricing and Ownership of US Green Bonds
Baker, M., Bergstresser, D., Serafeim, G., & Wurgler, J. (2022) · Annual Review of Financial Economics · doi:10.1146/annurev-financial-111620-014802 · Cited by 357
Self-citationZhang, D. (2023) · Energy Economics · doi:10.1016/j.eneco.2023.106688 · Cited by 291
Does sustainability generate better financial performance? review, meta-analysis, and propositions
Atz, U., Van Holt, T., Liu, Z. Z., & Bruno, C. C. (2023) · Journal of Sustainable Finance & Investment · doi:10.1080/20430795.2022.2106934 · Cited by 254
Metadata
- Authors
- Christensen, D. M., Serafeim, G., & Sikochi, A.
- Venue
- The Accounting Review
- Publisher
- American Accounting Association
- Published
- 2021-04-08
- Volume
- 97
- Issue
- 1
- Pages
- 147-175
- ISSN
- 0001-4826 (ISSN-L)
- 1558-7967
- OpenAlex
- W3153219724
- Cited by
- 1,537
- References
- 37
- FWCI
- 148.44
- Type
- journal article
- Language
- en
- Open access
- green
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Contains information from the Semantic Scholar Academic Graph Datasets, made available under the ODC Attribution License (ODC-BY 1.0).
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