Effect of mandatory sustainability disclosure announcements: cross-country evidence

Purpose – This study aims to examine whether announcements of mandatory sustainability disclosure affect corporate sustainability performance (CSP).

Design/methodology/approach – The authors use a quasi-experiment provided by mandatory sustainability disclosure announcements that occurred in 21 countries from 2006–2016. A difference-indifferences method is adopted. The authors restrict the drawing of all candidate treatment and control firms to a pool of firms that did not disclose sustainability information one year before the announcements.

Findings – The authors find that the announcements of mandatory sustainability disclosure are positively related to CSP. The positive effect is more pronounced for firms in countries with higher anticipation effects and lower awareness effects. Specifically, the authors find that the effect of the announcements is more pronounced in a country where the rule of law is higher and stakeholders are less likely to initiate communication about sustainability with firms, and with fewer active participants in and signatories to the United Nations Global Compact initiative. The findings hold under different robustness analyses.

Originality/value – The study enriches the knowledge about the effect of the announcements of comprehensive mandatory sustainability disclosure by analysing the consequences of these announcements. In the contribution to this growing stream of research, the authors provide evidence on the consequences of the announcements based on a cross-country sample and importantly, focusses on the non-economic consequences.