Giuseppe Galloppo

In the current paper, we investigate whether management adopts an optimistic disclosure tone to impress the corporate audience or to provide incremental information (II) by anticipating positive corporate performance. Specifically, we test whether an optimistic tone in annual reports (ARs) is a positive predictor of better financial and non‐financial (environmental and social) performance in the future, or whether impression management (IM) techniques obfuscate unsatisfactory performance. Using 7140 ARs issued by publicly listed firms in the Eurostoxx600 index from 2006 to 2019, we document mixed results. First, according to the II approach, managers use an optimistic tone in ARs to communicate incremental and value‐relevant information on corporate financial performance (CFP), thus aligning the perceptions of stakeholders with their personal perceptions. Moreover, managers adopt an opportunistic IM approach to communicate corporate environmental and social performance (CEP; CSP). Furthermore, our findings indicate that environmental, social, and governance (ESG) engagement positively moderates the incremental information effect on CFP disclosure, whereas corporate governance (CG) mechanisms positively moderate the link between an optimistic tone in ARs and both CEP and CSP.

Sustainability in corporate finance has gained prominence under growing societal and regulatory pressures. Green initiatives, encompassing sustainable technologies and practices, enhance environmental responsibility, financial performance, and competitiveness. This study examines a global data set of 2560 firms (2009–2023) to explore links between environmental innovation, financial performance (measured by return on equity), and institutional investors' influence. Findings reveal that pension funds promote green innovation due to long‐term goals, while investment firms prioritize short‐term returns, discouraging such activities. These results, robust across tests, highlight how investment horizons shape sustainability strategies, offering actionable insights for policymakers, investors, and regulators fostering sustainable growth. Lastly, our study aims to contribute to the advancement of the research stream from a theoretical standpoint by offering insights into overcoming the assumption of shareholder preference homogeneity, as posited by classical agency theory.

Although an increasing number of papers analyze losses due to natural disasters, there is no evidence that climate change events have an impact on Sustainable Investment Decisions. Our paper proves, by using data on natural disasters, that these natural disasters have a substantial influence on the returns of Exchange-traded Funds (ETF), showing that investors react to natural disasters by investing in sustainable financial products. Our findings suggest that large-scale natural disasters significantly increase investors’ preferences for sustainable ETFs. Finally, we also provide evidence that investors’ sentiment toward the sustainability theme has changed over time.

Using a novel hand‐collected sample including 159 industrial events that occurred between 2000 and 2020, we document that corporate social performance (CSP) generally acts as a halo effect mitigating the stock market drop following these events. These findings, robust to many alternative specifications, provide novel evidence shedding light on how corporate social capital acts as a mitigating device against the consequences of tail events. To the best of our knowledge, this is one of the first studies investigating the mitigation role of CSP in the aftermath of an industrial accident by analyzing a large global sample of industrial incidents. The practical and theoretical implications of our findings are at the bottom of that form of a socially normative corporate force embedded in social trust, smoothing managers' and stakeholders' interests together.