Does Persistence Explain ESG Disclosure Decisions?

Advocates of an increased focus on environmental, social, and governance (ESG) initiatives have argued that increased ESG disclosure is a necessary first step. Given the limited regulatory requirements on ESG disclosure, manager preferences serve as a primary determinant of ESG transparency. Using data on ESG disclosure from Bloomberg, I examine the extent to which disclosure persistence on the behalf of firm management, as proxied by managerial tenure, affects firms’ ESG disclosure strategies. Overall, I find that ESG disclosure quality and ESG disclosure variability are reduced as management tenure increases. Further, I find that the replacement of a firm’s CEO interrupts disclosure persistence, e.g., median ESG disclosure scores increase roughly 9.7% in the two years following the replacement of a firm’s CEO. The results of this study highlight one inhibitor, i.e., persistence, to inducing more complete, transparent ESG disclosure.