The value and relevance of environmental, social, and governance (ESG) is an important question because of the increasing popularity of using ESG factors to evaluate investments in companies.
In August 2019, for example, the Business Roundtable, which includes nearly 200 major-company CEOs, released a statement that a corporation’s concerns should go beyond shareholder value and include sustainability and other societal benefits. By 2019, the total assets under management (AUM) of signatories to the United Nations Principles for Responsible Investment have grown from just a few hundred-billion dollars to more than $90 trillion – almost three times the market capitalization of … Read more
Using environmental, social, and governance (ESG) factors to evaluate investments in companies has in recent years become increasingly popular and controversial. One of the most notable and influential initiatives for ESG investing is the United Nations Principles for Responsible Investment (PRI), created in 2006. Asset managers signing on to PRI commit to incorporating ESG into their portfolio decision-making and also to actively monitoring their investment. By 2019, the total assets under management (AUM) of signatories worldwide have grown from just a few hundred-billion dollars to more than $90 trillion – almost three times the market capitalization of companies in the … Read more
It has been well documented that in the U.S. and other countries with developed stock markets, sound public disclosure practices strengthen the reputation and credibility of firms. However, it’s unclear whether good disclosure practices are also beneficial in emerging markets that have weak systems of financial controls. Does disclosure build investor confidence? If so, are public disclosures the most effective way to disseminate information?
In my paper, “Catering through Disclosure: Evidence from Shanghai-Hong Kong Connect,” I use China to explore these questions and find that, although firms operating in developing markets use disclosure to boost investor confidence, it … Read more