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Can Board Gender Diversity Resolve ESG Rating Disagreement?
Yilan Cui  1@  , Nicolas Eugster  1@  , Hoang Luong  1@  
1 : The University of Queensland

This paper studies ESG rating disagreement with a focus on its antecedents by investigating whether board gender diversity (BGD) can resolve ESG rating disagreement. Using the U.S. data, we find a negative association between BGD and ESG rating disagreement—that is, greater gender diversity on boards is linked to higher agreement between ESG ratings. Our findings are robust to a battery of sensitivity checks. To address endogeneity concerns, we use instrumental variable (IV) and quasi-natural experiment difference-in-differences (DiD) approaches, and the results consistently point to a causal effect of BGD on ESG rating disagreement. We also document a moderating role of BGD in the relationship between ESG rating disagreement and two firm-level characteristics: ESG controversies and conservatism. Furthermore, we find that BGD's effect on ESG rating disagreement operates through improvements in firms' ESG performance, managerial ability, and voluntary disclosure.


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