The Consequences of Mandatory Corporate Sustainability Reporting

49 Pages Posted: 3 Apr 2011 Last revised: 1 May 2017

See all articles by Ioannis Ioannou

Ioannis Ioannou

London Business School - Department of Strategic & International Management

George Serafeim

Harvard Business School

Date Written: May 1, 2017


A key aspect of the governance process inside organizations and markets is the measurement and disclosure of important metrics and information. In this chapter, we examine the effect of sustainability disclosure regulations on firms’ disclosure practices and valuations. Specifically, we explore the implications of regulations mandating the disclosure of environmental, social, and governance (ESG) information in China, Denmark, Malaysia, and South Africa using differences-in-differences estimation with propensity score matched samples. We find that relative to propensity score matched control firms, treated firms significantly increased disclosure following the regulations. We also find increased likelihood by treated firms of voluntarily receiving assurance to enhance disclosure credibility and increased likelihood of voluntarily adopting reporting guidelines that enhance disclosure comparability. These results suggest that even in the absence of a regulation that mandates the adoption of assurance or specific guidelines, firms seek the qualitative properties of comparability and credibility. Instrumental variables analysis suggests that increases in sustainability disclosure driven by the regulation are associated with increases in firm valuations, as reflected in Tobin’s Q. Collectively, the evidence suggest that current efforts to increase transparency around organizations’ impact on society are effective at improving disclosure quantity and quality as well as corporate value.

Keywords: : disclosure regulation, sustainability reporting, mandatory disclosure, corporate sustainability, corporate social responsibility

JEL Classification: A13, I31, J24, J28, M00, M1, M14, M41, D82, D83, D84

Suggested Citation

Ioannou, Ioannis and Serafeim, George, The Consequences of Mandatory Corporate Sustainability Reporting (May 1, 2017). Harvard Business School Research Working Paper No. 11-100 , Available at SSRN:

Ioannis Ioannou

London Business School - Department of Strategic & International Management ( email )

Sussex Place
Regent's Park
London, NW1 4SA
United Kingdom
02070008748 (Phone)


George Serafeim (Contact Author)

Harvard Business School ( email )

Boston, MA 02163
United States


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