Abstract:  I examine how mandatory ESG disclosure regulations transmit to unregulated firms through ESG rating agencies’ peer benchmarking. Using the United Kingdom’s 2017 gender pay gap (GPG) disclosure mandate with its expected positive rating consequences for regulated UK firms, I show that unregulated firms with similar Refinitiv ESG ratings are significantly more likely to voluntarily disclose GPG information after the mandate.  The effect is more pronounced when peers are defined by ESG rating similarity rather than market capitalization and is not driven by industry affiliation alone. Consistent with ESG ratings creating competitive pressures, spillovers are strongest when UK peers were initially lower ranked and when unregulated firms can report relatively better GPG performance. Further analyses show that these spillovers extend to other social disclosures and generalize to the European Union’s Non-Financial Reporting Directive. Overall, the paper highlights how ESG rating structures extend the reach of disclosure regulations beyond their formal scope.

Abstract: This paper provides evidence that, after the introduction of mandatory GHG emissions disclosures in the United Kingdom, divestitures become more likely, particularly divestitures to acquirers outside Europe. These transactions significantly decrease (increase) the regulated sellers' (acquirers') emission levels and intensities. Divestitures of regulated firms carry significantly lower valuation multiples compared to those by non-regulated firms, indicating fire sale prices for the divested assets.  However, an increased likelihood of influential common ownership in the divesting and acquiring entity suggests that previous owners of the divested assets retain at least some of the economic benefits.

The results document a possibly unintended consequence of geographically-limited environmental disclosure mandates: Rather than reducing the actual emissions of their assets, firms may restructure by transferring legal ownership of high-emission assets to owners beyond the mandate's reach. The result is a mechanical decrease in the divesting firms' reported emissions which may not reflect a change in actual emissions.

Abstract: Recent evidence suggests that managers use voluntary CAPEX guidance to stimulate market feedback by incentivizing informed trading in their stock prices. We show a related decrease in nondisclosing firms' informed trading measures. The reduction in informed trading is pronounced in unexpected nondisclosure, consistent with the interpretation that traders perceive nondisclosure as indicating low gains from informed trading. Less informed trading is associated with a reduction in investment-q sensitivity and future performance for nondisclosing firms. Overall, we document a novel link between managers' strategic disclosure decisions, the feedback channel, and real effects.