Type and Duration
FFF-Förderprojekt, January 2024 until December 2024Coordinator
Sustainable Finance & InvestmentsMain Research
Wealth ManagementDescription
This study addresses an important gap in our understanding of how industry-specific ESGs affect market valuations and risks. While investor attention on ESG factors has increased, there is an urgent need for a thorough assessment of the reliability and comprehensiveness of ESG ratings in the context of voluntary disclosure by companies. This study aims to determine how failure to disclose ESG information affects market valuations.Using a systematic approach, this project analyzes the frequency of disclosure of non-financial key performance indicators (KPIs) within each industry and develops a unique metric for non-disclosure. This approach ensures accurate representation of the disclosure landscape across vari-ous industrial sectors. This study uses established asset-pricing models to provide a comprehensive understanding of the impact of ESG non-disclosure on market valuation and risk.
This study examines whether companies with high levels of non-disclosure face market valuation disadvantages, and whether the impact of non-disclosure varies by company size and industry. To account for differences in ESG reporting standards, companies are categorized by industry or sec-tor and statistical techniques are used to examine the relationships between ESG disclosure, mar-ket value, and risk.
Practical Application
Our project's practical relevance lies in its potential to inform investors, companies and regulators. We are investigating how non-disclosure of environmental, social and governance (ESG) information affects market valuations and risks. Our research has practical implications for a range of stakeholders.For investors, our findings can guide investment decisions by highlighting the importance of ESG information in assessing a company's true value and risks. By understanding the impact of non-disclosure on market valuation, they can make more informed decisions in line with their sustainability objectives and risk tolerance. By better understanding the importance of transparent ESG reporting, companies can benefit from our research. By recognising the potential impact of non-disclosure on market perception and valuation, companies can improve their disclosure practices, thereby increasing transparency and stakeholder confidence.
Regulators can use our findings to inform policy decisions aimed at promoting ESG disclosure standards. Regulators can develop frameworks that promote greater transparency and accountability in corporate reporting by identifying the impact of non-disclosure on market efficiency and investor protection
Reference to Liechtenstein
The added value of our project for Liechtenstein is manifold. In addition to improving transparency and sustainability in the local financial ecosystem, our research also contributes to Liechtenstein's attractiveness as a first-class financial center. By focusing on the impact of undisclosed ESG data on market valuation and aligning our research with global trends that prioritize sustainability in the financial sector.In addition, our project supports research in the field of sustainable finance and positions Liechtenstein as an innovative location for ESG-related financial products and services. This not only promotes economic growth, but also strengthens Liechtenstein's reputation as a center for forward-looking financial solutions.
Participation in international conferences, publication in renowned journals and global dissemination of the results help to establish Liechtenstein as a forward-looking and responsible financial center, attract the attention of investors, regulators and industry representatives worldwide, and establish Liechtenstein as a preferred destination for sustainable finance initiatives.
