We investigate the effect of Environmental, Social, Governance (ESG)-related disclosure on foreign investments for Indian firms where financial reporting does not provide adequate and reliable information. We show a preference of foreign investors for firms disclosing ESG-related information. Our results suggest that ESG-related disclosure is particularly useful for firms facing information problems. Finally, we report that the effect of ESG-related disclosure is lesser on domestic investors.

Surya Bhushan Kumar

Finance and Accounting

Yogesh Chauhan

<p>IIM Indore seeks to be a contextually-relevant business school with world-class academic standards that develops socially-conscious managers, leaders and entrepreneurs. IIM Indore is committed to: Excellence in management education, research, and training, Use of contemporary participant-centric pedagogies and teaching methods, A presence in emerging segments of management education.</p>

IIM Indore

Journal of Multinational Financial Management

This paper studies the impact of the nonfinancial disclosure on firm value for a large sample of Indian firms, arguably emerging market with poor investor protections and legal enforcement. We proxy the nonfinancial disclosure by the Bloomberg score on the extent of a firm's Environmental, Social, and Governance disclosures, and find positive valuation effects associated with the nonfinancial disclosure. We find the nonfinancial disclosure is more valuable to standalone firms compared to business group firms. This paper shows that the positive valuation effects associated with the nonfinancial disclosure are attributable to lower cost of funds and higher operating cash flows.

Emerging Markets Review

Do investors value the nonfinancial disclosure in emerging markets?

Journal of Financial Economics

Do institutional investors drive corporate social responsibility? International evidence

Does founder ownership affect foreign investments? Evidence from India

Critical Finance Review

Shock-Based Causal Inference in Corporate Finance and Accounting Research

The End of Accounting and the Path Forward for Investors and Managers

The value relevance of nonfinancial disclosure: Evidence from foreign equity investment

Journal	Data powered by TypesetJournal of Multinational Financial Management
Publisher	Data powered by TypesetElsevier BV
ISSN	1042-444X
Open Access	No