International variations in ESG disclosure – Do cross-listed companies care more?

We study the quantity of ESG disclosure of 1,963 large-cap companies headquartered in 49 countries. Using the Bloomberg ESG disclosure score as the measure of disclosure quantity, we find that firm characteristics explain most of the variation in firms' ESG disclosure, whereas variations in country factors such as corruption and political rights explain less. We empirically examine and extend the theoretical framework of the liability of foreignness in capital markets. Our results support the notion that cross-listed firms disclose more ESG data than those only listed in their home market to mitigate the liability of foreignness in external capital markets. We also find that an increased percentage of foreign ownership does not augment ESG disclosure. Companies which opt to increase foreign equity ownership at home do not encounter the challenges of foreignness. Our findings suggest that cross-listed status is likely to reduce the importance of country factors for variations in ESG disclosure quantity.