ESG rating divergence and corporate environmental information disclosure quality: Do investors matter?

Amid the surge in ESG-driven investment, corporate responses to market uncertainties induced by ESG rating divergence have drawn growing attention. Using data from China’s A-share listed firms spanning 2015 to 2023, this study examines how ESG divergence influences corporate environmental information disclosure quality. Results indicate a significant positive relationship: firms facing greater rating divergence tend to provide higher-quality environmental information disclosures. Mechanism analyses suggest two pathways: heightened retail investor pessimism and reduced institutional ownership, both of which incentivize improved transparency. The effect is strengthened by the presence of green investors but weakened by managerial power. Further heterogeneity tests show that this relationship varies by analyst coverage, public environmental attention, and information asymmetry. These findings shed light on the dual role of ESG rating divergence, as both a source of market noise and a driver of enhanced disclosure.