When Words Shape Sustainability: Managerial Sentiment and <scp>ESG</scp> Performance

ABSTRACT This study examines whether and how managerial sentiment shapes corporate ESG performance. We find that more positive managerial sentiment significantly improves ESG performance by mitigating managerial myopia and encouraging risk‐taking, and that the effect is stronger for firms with greater external attention, higher‐quality information environments and weaker enforcement of ESG disclosure requirements. By identifying managerial sentiment as an internal, affective driver of corporate sustainability, the study extends research on ESG determinants beyond managers' demographic and structural traits and on the economic consequences of disclosure tone, underscoring the role of managerial psychology in firms' long‐term sustainability strategies.