This study examines whether investor-management interactions during corporate site visits in China help reduce ESG rating divergence. Building on prior research that identifies information asymmetry as a key driver of ESG rating divergence, we investigate whether voluntary disclosure in an interactive setting improves the subsequent consistency of ESG assessments. In particular, we focus on whether ESG-related attention during corporate site visits influences ESG rating divergence and through what mechanisms.
Using a sample of A-share firms listed on the Shenzhen Stock Exchange, we match corporate site visits from 2012 to 2021 with ESG rating divergence in the following year from 2013 to 2022. ESG attention is measured through textual analysis of Q&A transcripts using a Latent Dirichlet Allocation (LDA) topic model. ESG rating divergence is measured as the standard deviation of standardized ESG ratings issued by six major rating agencies. To test our hypotheses, we estimate OLS regressions with firm and year fixed effects.
We find that greater ESG attention during corporate site visits significantly reduces subsequent ESG rating divergence. This effect operates through two channels: improved information disclosure quality and increased media coverage. In addition, the mitigating effect is more pronounced when management responses are more positive, when firms use more euphemistic language, and when firms operate in environmentally sensitive industries.
Our findings identify private investor–management interactions during corporate site visits as an important factor shaping ESG rating divergence. This study contributes to the literature on ESG ratings and voluntary disclosure by showing that corporate site visits can reduce information asymmetry and improve the consistency of ESG evaluations. The findings also offer practical implications for managers, investors, and regulators.
