Institutional signaling with the help of ESG reporting

The current trends in the development of the reporting system in the conditions of the development of the institutional foundations of enterprise activity on the basis of sustainable development have been analyzed. The expediency of using the signaling theory for a more thorough understanding of the processes of interaction between the enterprise and stakeholders has been grounded. A historical analysis of the use of signaling theory in accounting has been carried out. Based on the analysis of the works of accounting scientists, three main areas of application of the signaling theory in accounting have been highlighted (when choosing accounting methods; when disclosing additional information about financial efficiency; when disclosing additional accounting information about sustainable development). The theoretical foundations of the signaling theory as a means of explaining the interaction of the enterprise with stakeholders using the disclosure of ESG reporting have been considered. The institutional signaling mechanism using ESG reporting in the signaling environment has been developed and analyzed. The disadvantages of applying the signaling theory to the analysis of ESG reporting disclosure processes in cases of manipulation of indicators and their falsification have been highlighted. The reasons for the need to develop a signaling theory in order to overcome the problem of providing false signals by enterprises using ESG reporting have been grounded.