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Transparency among S&P 500 companies: an analysis of ESG disclosure scores

Management decision, , Vol.55 (8), p.1660-1680 [Peer Reviewed Journal]

Emerald Publishing Limited ;Emerald Publishing Limited 2017 ;ISSN: 0025-1747 ;EISSN: 1758-6070 ;DOI: 10.1108/MD-01-2017-0018

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  • Title:
    Transparency among S&P 500 companies: an analysis of ESG disclosure scores
  • Author: Tamimi, Nabil ; Sebastianelli, Rose
  • Subjects: Accountability ; Annual reports ; Boards of directors ; Business ethics ; Corporate governance ; Corruption ; Decision making ; Disclosure ; Employees ; Hypotheses ; Information management ; Legitimacy ; Literature reviews ; Management decisions ; Quality ; Reputation management ; Social responsibility ; Stakeholders ; Stock market indexes ; Stockholders ; Supply chains ; Sustainability ; Sustainability reporting ; Theory ; Transparency
  • Is Part Of: Management decision, , Vol.55 (8), p.1660-1680
  • Description: Purpose The purpose of this paper is to explore the state of S&P 500 companies’ transparency by analyzing their Bloomberg ESG (Environmental-Social-Governance) disclosure scores. Additionally, the effects of industry sector, firm size, and governance practices on transparency are examined. Design/methodology/approach Data were retrieved from Bloomberg using the financial analysis environmental, social and governance function for companies comprising the S&P 500 index. Descriptive statistics are provided on each of the three components separately (ESG). Nonparametric procedures are used to test for significant differences in transparency within each of these three areas based on industry sector. Additionally, nonparametric tests are used to determine the impact of firm size (market capitalization) and governance factors (board size, board gender diversity, chief executive officer (CEO) duality, and linking executive compensation to ESG disclosure) on the composite ESG score. Findings Descriptive statistics reveal that S&P 500 companies differ in their level of disclosure across the three areas (ESG). The highest level of transparency is found on Governance and the lowest on Environmental. Moreover, there is much variability in the percentage of S&P 500 companies disclosing information about specific Social policies (e.g. child labor). Significant differences in transparency on both the Social and Governance dimensions are found between certain industry sectors. The results also reveal that large-cap companies have significantly higher ESG disclosure scores than mid-cap companies and that governance factors impact ESG disclosure. Significantly, higher ESG disclosure scores are observed for S&P 500 firms with larger boards of directors, with boards that are more gender diverse, that allow CEO duality, and that link executive compensation to ESG scores. Originality/value This study focuses on corporate transparency through a granular analysis of ESG disclosure scores when most other studies have been primarily conducted at the macro level. Stakeholders, analysts, and shareholders are increasingly scrutinizing firms’ sustainability disclosures in their assessment of management quality, as it reflects on the practices/policies that are employed to improve firms’ environmental and social footprints.
  • Publisher: London: Emerald Publishing Limited
  • Language: English
  • Identifier: ISSN: 0025-1747
    EISSN: 1758-6070
    DOI: 10.1108/MD-01-2017-0018
  • Source: ProQuest Central
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