Consequences of the European Union's non-financial reporting directive

Publikation: Working/Discussion PaperWorking Paper/Preprint

Abstract

This study examines the impact of the European Union's non-financial reporting directive (NFRD), Directive 2014/95/EU, mandating the disclosure of environmental, social, and governance information (ESG) for large firms listed on the European Union's stock exchanges. To identify a possible effect of the regulation on firms' ESG reporting practices, I track the Bloomberg ESG disclosure scores of affected EU firms and matched control firms before and after the regulation came into force. The results reveal a significantly larger increase in ESG disclosure for firms within the scope of the directive compared to the control sample. I also analyze cross-sectional differences in response to the directive depending on prior ESG reporting regulations or firms' pre-regulation reporting levels. This study also highlights the importance of enforcement measures for the successful implementation of an ESG reporting mandate.
OriginalspracheEnglisch
PublikationsstatusIn Vorbereitung - 2022

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