ESG performance and firm value: The moderating role of disclosure

This study investigates the effect of environmental, social, and governance (ESG) activities and their disclosure on firm value. We find that ESG strengths increase firm value and that weaknesses decrease it. ESG disclosure, per se, decreases valuation. But more importantly, we find that disclosure plays a crucial moderating role by mitigating the negative effect of weaknesses and attenuating the positive effect of strengths. (C) 2017 Elsevier Inc. All rights reserved.