Mandatory versus voluntary: The real effect of ESG disclosures on corporate earnings management

作者：Xue Cui, Ruochen Li, Shuyu Xue, Xiaomei Zhang · 发表于：Journal of International Money and Finance · 年份：2025 · DOI：10.1016/j.jimonfin.2025.103323 · 被引用次数：22 · 研究领域：Auditing, Earnings Management, Governance、Financial Reporting and Valuation Research、Corporate Finance and Governance

This paper aims to explore the real effect of mandatory and voluntary environmental, social, and governance (ESG) disclosure on corporate earnings management. We find that mandatory ESG disclosure has a negative effect on firms’ earnings management, while voluntary disclosure has almost no significant impact. We exploit China’s 2008 mandate regulation and construct a difference-in-differences design to show that firms with mandatory ESG disclosure experience an alleviation of information asymmetry through increased transparency of specific accounting items and eventually decrease earnings management. In addition, the negative effect of mandatory ESG disclosure is more pronounced for firms with stronger motivations to manipulate earnings. We also find that the ESG disclosure quality is higher under mandatory disclosure and the environmental, social, and government performance is improved for firms disclosed ESG reports. Our results support the view that mandatory ESG disclosure has informative advantages over voluntary disclosure and improves the quality of financial reporting.