Voluntary ESG information disclosure on social media and ESG rating divergence: evidence from Sina Weibo

This paper examines the impact of firms’ voluntary ESG disclosures on social media on ESG rating divergence using data from China’s Sina Weibo. The results show that social media disclosure of ESG information alleviates ESG rating divergence, supporting the information effect hypothesis rather than the noise effect hypothesis of voluntary disclosure. ESG-related posts on Weibo contain significant informational value, as evidenced by their association with lower stock price synchronicity. Moreover, the mitigating effect is more pronounced for social media posts disclosing ESG information with more likes, reposts and comments. Heterogeneity analysis reveals that the effect of voluntary ESG information disclosure in reducing ESG rating divergence is more significant for firms rated by domestic agencies, non-polluting firms and firms in areas with higher Internet penetration. Additional tests rule out the possibility that firms disclose ESG information on social media primarily for greenwashing purposes. Overall, the findings highlight that social media is an effective channel for enhancing ESG information transparency, improving the ESG disclosure system and strengthening the reliability of ESG ratings.