International variation in ESG disclosure – Do cross-listed companies care more?

We study the ESG disclosure of 1,963 large-cap companies headquartered in 49 countries. In this paper, a firm’s environmental, social and governance (ESG) transparency is measured as the quantity of ESG data disclosed to the public. Using the Bloomberg ESG disclosure score as the measure of transparency, we find that firm characteristics explain most of the variation in ESG transparency, whereas variations in country factors such as corruption and political rights explain less. We empirically examine and extend the theoretical framework of the liabilities of foreignness in capital markets. Our results support the notion that cross-listed firms disclose more ESG data than those only listed in their home market to mitigate the liability of foreignness in external capital markets. We also find that an increased percentage of foreign ownership does not augment ESG disclosure. Companies which opt to increase foreign equity ownership at home do not encounter the challenges of foreignness. Our findings also suggest that cross-listed status is likely to reduce the importance of country factors for variations in ESG transparency