The Politics of ESG Disclosure and Performance

   Business School

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  Dr Daniel Gyimah, Dr Laura McCann  Applications accepted all year round  Self-Funded PhD Students Only

About the Project

ESG issues continue to drive corporate policy as investors become more ESG-oriented. As such, firms are now more focused on ESG disclosure and performance. However, there are several ESG rating agencies (six prominent ESG rating agencies include KLD, Sustainalytics, Moody’s ESG (Vigeo-Eiris), S&P Global (RobecoSAM), Refinitiv (Asset4), and MSCI) that do not necessarily agree on ratings of specific firms. In other words, rating agencies tend to disagree on ratings assigned to firms. Christensen, Serafeim and Sikochi (2022) test and find that greater ESG disclosure engenders greater ESG rating disagreement, generating higher return volatility and limiting a firm’s ability to obtain external financing. Moreover, Serafeim and Yoon (2022) report that consensus rating predicts future ESG news and the associated market reactions. These studies suggest the information relevance of ESG performance to investors.

Politics and the environmental, social and governance (ESG) agenda are inextricably intertwined. Across several countries, activists seek to pressure governments to enact policies that respond to environmental issues. For example, Yu and Luu (2021) observe significant variation in ESG disclosure across countries. The authors report that while corruption and political rights do not impact ESG disclosure, cross-listed firms tend to provide greater disclosure to mitigate the negative effect of being a foreign company. The pressure to develop a responsible business that is both socially conscious and environmentally responsible comes from various corporate stakeholders, including investors, interest groups, regulators and politicians. Empirical research finds that firms that face significant shareholder activism through political spending-related shareholder proposals provide greater ESG disclosure (Baloria, Klassen, and Wiedman, 2019). Similarly, corporates are devising governance frameworks that are diverse and inclusive of different constituencies within the corporate structure.

ESG issues are at the forefront of political debates, with politicians driving the ESG agenda or impeding its progress. Both corporate culture and a CEO’s political leaning influence corporate policies. Firms and CEOs spend large sums on corporate lobbying on government policies. In the main, firms tend to influence policies that impact their corporate agenda. Thus, CEO political contributions and lobbying efforts influence ESG disclosure and performance. Even though the COVID-19 pandemic seems to have temporarily staunched the agenda, ESG issues will inevitably become a mainstay of corporate discussions for the foreseeable future. In that sense, corporate executives will need to appreciate the political environment around ESG when developing their corporate strategy.

The PhD will explore how corporate political contributions and a CEO’s political orientation impact a firm’s ESG disclosure and performance. It will highlight the differences between conservative and democratic CEO approaches to ESG issues. Moreover, the research will examine the changes in ESG disclosure and performance around election cycles, for example, during the US midterm elections, where candidates jockey for corporate political contributions. If the ESG agenda is driven or influenced by politics, then a firm’s ESG performance should reflect its state’s political leaning towards ESG issues. Therefore, the research will examine ESG performance and disclosure of firms in Republican/Democratic-leaning states.

Applicants interested in undertaking research in this area should submit a more detailed research proposal (of a maximum of 2,000 words) that develops some ideas and shows a comprehensive understanding of the existing literature and methodologies.

Informal inquiries can be made to Daniel Gyimah ([Email Address Removed]) with a copy of your latest curriculum vitae and cover letter indicating your interest in the project and why you wish to undertake it.

Computer Science (8) Finance (14)

Funding Notes

This PhD project has no funding attached and is therefore available to students (U.K./International) who are able to seek their own funding or sponsorship. Supervisors will not be able to respond to requests to source funding.
The successful applicant is expected to have (or be close to graduating with) an MSc in Finance or in a related area, e.g., an MSc in Accounting, Finance, Economics or a cognate discipline. Applicants should have a strong interest or experience in data preparation and in the implementation of projects. The project requires excellent skills in statistic applications or programming (Stata).


Baloria, V. P., Klassen, K. J., & Wiedman, C. I. (2019). Shareholder activism and voluntary disclosure initiation: The case of political spending. Contemporary Accounting Research, 36(2), 904-933.
Berg, F., Koelbel, J. F., & Rigobon, R. (2019). Aggregate confusion: The divergence of ESG ratings. Forthcoming Review of Finance.
Capelle-Blancard, G., & Petit, A. (2019). Every little helps? ESG news and stock market reaction. Journal of Business Ethics, 157(2), 543-565.
Christensen, D. M., Serafeim, G., & Sikochi, A. (2022). Why is corporate virtue in the eye of the beholder? The case of ESG ratings. The Accounting Review, 97(1), 147-175.
Serafeim, G., & Yoon, A. (2022). Stock price reactions to ESG news: The role of ESG ratings and disagreement. Review of Accounting Studies, 1-31.
Yu, E. P. Y., & Van Luu, B. (2021). International variations in ESG disclosure–do cross-listed companies care more? International Review of Financial Analysis, 75, 101731.

Where will I study?

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