Firm characteristics, governance mechanisms, and ESG disclosure: how caring about sustainable concerns?

Environmental, social, and governance (ESG) pillars help determine the business organizations' sustainable business practices. Considering the same, this research examines the association between firm characteristics, governance mechanisms, and ESG for a sample of 564 firms from fifteen developed economies. For empirical analysis, ordinary least square, fixed effect, and random effect estimations techniques were applied using annual data from 2010 to 2019. The overall findings reveal that the governance structure of firms (board size, board independence, and cross-listing) play a significant role in ESG disclosure. Moreover, low corruption perception reflects higher ESG disclosure among the targeted firms. Additionally, firm characteristics; such as liquidity position shows a better reporting of ESG during the study period. When accounting for the ESG disclosure individually, the findings confirm the productive role of board size, current ratio, and low corruption towards environmental exposure. Lastly, the results demonstrate that board size and ESG disclosure promote better financial performance. These results offer valuable policy recommendations.