Building Trust for Sustainable Disclosure: The Effect of Social Capital on Sustainable Disclosure and the Moderating Role of Corruption

ABSTRACT This paper explores the effect of social capital on firms' Environmental, Social, and Governance (ESG) disclosure practices using a sample of US companies. We propose that public corruption moderates this relationship. Our findings indicate that for social capital to effectively enhance ESG disclosure, it must function within a low‐corruption environment. We show that governmental commitment decreases the negative impact of corruption and amplifies the positive effect of social capital on ESG disclosure. Our results emphasize that corruption erodes trust and undermines the benefits of social capital, highlighting the importance of a robust governmental system for promoting corporate ESG transparency. This study contributes to the understanding of the complex dynamics influencing ESG disclosure practices and stresses the role of institutional frameworks and societal norms in advancing corporate transparency and accountability.