Disclosure incentives, ESG visibility, and market valuation: Evidence from Korea’s Corporate Value-Up Program

Abstract We examine how expanding participation through policy incentives changes the information conveyed by corporate disclosure and whether a firm’s prior environmental, social, and governance (ESG) visibility shapes the market response. The Korea Corporate Value-Up Program offers a useful setting because a December 2025 tax amendment substantially increased participation without changing the underlying disclosure framework. Our analysis covers the full text of 1,086 filings and compares 145 firms that disclosed under the initial voluntary regime with 541 firms that disclosed after the incentive was introduced. Event-study estimates are evaluated against propensity-score-matched non-disclosing firms. The three-day matched-pair cumulative average abnormal return is 1.008 percentage points before the amendment but only 0.005 percentage points afterward. During the voluntary period, announcement returns are smaller for firms with higher prior ESG ratings, suggesting that disclosure provides less new information when a firm is already closely followed. Once participation becomes widespread, the announcement effect disappears. Instead, investors respond to the specificity of disclosed commitments, but only when those commitments come from firms with higher ESG ratings. These findings show that disclosure operates through two distinct channels: the decision to disclose and the credibility of what is disclosed. Policies that increase participation may therefore broaden disclosure coverage while weakening participation itself as a market signal.