Flight to ESG Transparency: Evidence from Foreign Government Procurement Contracts
Seminar
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Date
03 Oct 2023
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Organiser
School of Accounting and Finance
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Time
10:30 - 12:00
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Venue
M714
Speaker
Dr Yi Xiang
Enquiry
Ms Alice Kwok +852 2766 4398 ht-alice.kwok@polyu.edu.hk
Summary
Abstract:
This study examines whether improved environmental, social, and governance (ESG) transparency enhances firms’ competitiveness for foreign government procurement contracts. Exploiting the staggered adoption of mandatory ESG disclosure requirements across countries, we find that, following the ESG disclosure mandate, firms in the treated countries are more likely to receive foreign governments’ procurement contracts and contracts with higher values than their counterparts in the control countries. This effect is more pronounced for green contracts, suppliers with enhanced ESG disclosure quality after the mandate, and purchasing governments exhibiting a higher degree of ESG consciousness. Moreover, the effect is stronger when suppliers face more intensive competition. Channel tests indicate that the ESG disclosure mandate affects global allocation of government procurements through two channels: increased ESG disclosure and improved ESG performance. Our findings shed light on the role of ESG transparency in contracting with foreign governments.
Keynote Speaker
Dr Yi Xiang