Global Evolution of Environmental and Social Disclosure in Annual Reports *

Journal of Accounting Research forthcoming

72 Pages Posted: 13 Jul 2023 Last revised: 1 Mar 2024

See all articles by Yan Lin

Yan Lin

University of Macau

Rui Shen

The Chinese University of Hong Kong, Shenzhen - School of Management and Economics; Shenzhen Finance Institute

Jasmine Wang

University of Virginia

Y. Julia Yu

University of Virginia

Date Written: August 11, 2024

Abstract

We study environmental and social (E&S) disclosures in annual reports. Using the word embedding model to examine over 210,000 annual reports from 24,271 public firms in 30 international countries/regions between 2001 and 2020, we create an E&S dictionary that allows us to document trends in annual report E&S disclosure. Specifically, we find: 1) increases in length and boilerplate language, and 2) decreases in specificity. Our results also suggest that E&S disclosure quality improves after the adoption of voluntary ESG reporting frameworks but deteriorates after disclosure mandates. Our findings provide systematic evidence on the evolution of E&S disclosure in annual reports over the past two decades and shed light on how voluntary and mandatory standards have shaped global E&S reporting practices.

Keywords: ESG disclosure, Nonfinancial information, Textual analysis, Machine learning

JEL Classification: G15, G38, M14, M40, M48

Suggested Citation

Lin, Yan and Shen, Rui and Wang, Jasmine and Yu, Yingri Julia, Global Evolution of Environmental and Social Disclosure in Annual Reports * (August 11, 2024). Journal of Accounting Research forthcoming, Available at SSRN: https://ssrn.com/abstract=4500957 or http://dx.doi.org/10.2139/ssrn.4500957

Yan Lin

University of Macau ( email )

P.O. Box 3001
Macau

Rui Shen (Contact Author)

The Chinese University of Hong Kong, Shenzhen - School of Management and Economics ( email )

2001 Longxiang Road, Longgang District
Shenzhen, 518172
China

Shenzhen Finance Institute ( email )

Jasmine Wang

University of Virginia ( email )

125 Ruppel Dr
306 Rouss and Robertson Hall
Charlottesville, VA 22903
United States

Yingri Julia Yu

University of Virginia ( email )

P.O. Box 400173
Charlottesville, VA 22904-4173
United States

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