The Financially Material Effects of Mandatory Nonfinancial Disclosure

• 成果类型: Article
• 署名作者: Gibbons, Brian
• 署名单位: Oregon State University
• 刊物名称: JOURNAL OF ACCOUNTING RESEARCH
• ISSN/ISSBN: 0021-8456
• DOI: 10.1111/1475-679X.12499
• 发表日期: 2024
• 页码: 1711-1754
• 关键词: executive-compensation; corporate governance

摘要

Complaints from institutional investors suggest that principles-based disclosure regimes that rely on financial materiality standards produce inadequate nonfinancial environmental and social (E & S) information. Using the staggered introduction of 40 country-level regulations that mandate disclosure, I document that reporting E & S information relates to increased investment from institutional owners and has material effects on firms' investment and financing decisions. Firms mandated to disclose E & S information allocate more investment toward long-term, innovative projects and raise more equity capital. Evidence indicates that disclosure attracts long-term-oriented institutional clientele with E & S preferences, which then feeds back on firm decision making. Although the effects of nonfinancial disclosure are similar to those of improved financial disclosure, this clientele mechanism is unique. Taken together, these results suggest that jurisdictions that rely solely on financial materiality disclosure standards create nonfinancial information frictions with material effects on investors and firm decision making.