Does Mandatory ESG Disclosure Move Stock Prices? Evidence from the European Union’s Corporate Sustainability Reporting Directive

The Corporate Sustainability Reporting Directive (CSRD) extends mandatory, assured and standardised sustainability reporting to a European reporting population several times larger than that of its predecessor, on the premise that such disclosure is priced by capital markets. This paper examines whether equity prices responded to the five legislative and standard-setting milestones through which the mandate became public between April 2021 and July 2023. German DAX constituents falling within the scope of Article 19a are compared with matched S&P 500 firms, using an annual difference-in-differences design and a daily market model event study. The annual estimator yields a positive and significant coefficient of +0.204 that is robust to alternative specifications, standard error corrections and influence diagnostics. Four diagnostics nevertheless indicate that it does not identify a regulatory effect: the same design applied to year pairs containing no CSRD or ESRS event yields estimates of comparable magnitude and mixed sign; parallel pre-trends are rejected; the coefficient is concentrated among poorly matched firm pairs and falls to +0.046 once a caliper is imposed; and the design is underpowered for effects of the magnitude it reports. The event study, which measures each firm against its own home market and therefore does not rely on the cross-country comparison, detects no abnormal return at any milestone once multiple testing and cross-sectional dependence are taken into account: the cumulative 3-day reaction across all five events is +0.8 percentage points, with a 95% confidence interval of [−2.5, +4.0], which excludes a repricing of the magnitude the annual estimate implies. The paper contributes a set of design diagnostics that distinguish an identified estimate from one that is merely stable, and shows that the two-country annual comparisons common in this literature do not survive them.