The Shareholder Wealth Effects of ESG Disclosure Mandates: A Comparative Event-Study Analysis

Mandatory environmental, social, and governance disclosure regimes have expanded rapidly, most significantly through the European Union’s Corporate Sustainability Reporting Directive and the more contested rulemaking efforts of the U.S. Securities and Exchange Commission. Proponents argue that mandated disclosure reduces information asymmetry and therefore the cost of capital; critics argue that compliance costs, particularly for smaller issuers, exceed any informational benefit and may depress firm value. This article surveys the event-study methodology used to test these competing claims, reviews the existing empirical literature on cumulative abnormal returns around ESG disclosure rule announcements, and conducts an original comparative analysis contrasting market reactions to the CSRD’s phased implementation with reactions to comparable disclosure milestones under the SEC’s now-narrowed climate disclosure rule. We find that market reactions differ systematically by firm size and industry exposure to transition risk, complicating any unqualified claim that mandatory ESG disclosure either creates or destroys shareholder value as a general matter. We argue that this heterogeneity has direct implications for the design of proportionate disclosure thresholds.