The 28th Frontier Forum for Digital Technology and Finance

Abstract：

In this study, we investigate the interplay among mandatory environmental, social, and governance (ESG) disclosure regulations, executive compensation, and corporate ESG performance. Using a sample of 8,177 firms across 42 countries during the period of 2002-2020, we find that firms subject to mandatory ESG disclosure are likely to adopt ESG contracting for CEOs by 25% after mandatory ESG disclosure, in comparison to other firms. Additionally, we observe that mandatory ESG disclosure alone has a limited impact on corporate ESG performance, while companies that tie CEO compensation to ESG metrics post mandatory ESG disclosure experience noteworthy enhancements in ESG performance, i.e., a 13.64% surge in their ESG environmental score, a 6.36% increase in total waste recycled, and a 1.7% reduction in greenhouse gas emissions. This study contributes to the understanding of the economic mechanisms underlying ESG transparency regulations, underscoring the importance of instilling appropriate managerial incentives to realize the regulatory effectiveness of disclosure regulations. 

Speaker Introduction:

Dr Xiaofei Pan is Associate Professor of Finance at School of Business, University of Wollongong. He also serves as the Head of Postgraduate Studies and Co-Director of Centre of Contemporary Australasian Business and Economics (CCABES) at the School of Business. His research interests include corporate finance, political economy and financial institutions. His academic papers have been published in a number of prestigious international journals, such as Review of Finance, Management Science, Research Policy, Journal of Corporate Finance, Journal of Banking and Finance, European Accounting Review, Auditing: A Journal of Practice and Theory. He is currently serving as an Associate Editor at Emerging Market Review. He has received OCTAL awards, Best Paper awards and other various awards for his teaching and research.