Is more ESG disclosure always better? New evidence from ESG disclosure quantity and firm value

In recent years, ESG disclosure has become a prominent topic in capital markets, yet its impact on firm value remains contested. This study integrates ESG disclosure, ESG performance, and firm value into a unified analytical framework. Using panel data on Chinese A-share listed firms from 2009 to 2023, we investigate how the quantity of ESG disclosure affects firm value. Our findings reveal that the average marginal effect of ESG disclosure on firm value is dynamic, evolving from negative to positive as ESG performance improves. This pattern remains robust after conducting a series of robustness checks. Mechanism analyses suggest that ESG disclosure affects firm value through two channels: the volume of favorable media coverage related to ESG activities and the degree of divergence in ESG ratings. Further analysis shows that the environmental, social, and governance components exhibit similar dynamic patterns, with the environmental dimension reaching its inflection point earlier than the others. Moreover, improvements in ESG disclosure quality, higher levels of institutional ownership, and state ownership all significantly reduce the sensitivity of firm value to ESG disclosure quantity, exerting a smoothing effect on their dynamic relationship. These findings deepen our understanding of the ESG–firm value nexus and offer practical implications for ESG-related regulatory policy.