Topics That Matter: ESG Reports and Information Asymmetry

Thewissen, James;Shrestha, Prabal;Arslan‐ayaydin, Özgür;Beibei, Yan
(2026) Journal of Financial Research — p. 1-54 (2026)

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Authors
  • Thewissen, Jamesorcid-logoUCLouvain, Louvain School of Management Louvain Research Institute in Management and Organizations LouRIM Louvain‐la‐Neuve Belgium
    Author
  • Shrestha, PrabalUCLouvain, Louvain School of Management Louvain Institute of Data Analysis and Modeling in Economics and Statistics, LIDAM, LFIN Louvain‐la‐Neuve Belgium
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  • Arslan‐ayaydin, ÖzgürDepartment of Finance University of Illinois Chicago Chicago Illinois USA
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  • Beibei, YanSILC Business School Shanghai University Shanghai China
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Abstract
This study examines how the thematic content of Environmental, Social, and Governance (ESG) reports relates to information asymmetry in capital markets. Analyzing 7,565 ESG reports from 1,715 U.S. firms between 1998 and 2023 using sentence-level topic modeling (sentLDA), we identify 30 distinct disclosure topics. Using the dispersion in analysts' forecasts as a proxy for information asymmetry, the results indicate that environmental themes are associated with lower levels of analyst disagreement, social topics with higher disagreement, while governance-related themes show limited association. These findings highlight that the informativeness of ESG reports depends not only on whether firms choose to disclose ESG information, but also on what they choose to disclose. In addition, we find that first-time reports are more informative than subsequent ones and that topic diversity exhibits a concave relationship with informativeness, suggesting diminishing returns from a broader thematic coverage. Finally, we find that ESG reports' informativeness is greater when analyst coverage is greater, institutional ownership is lower, ESG performance is higher, and third-party ESG ratings show greater convergence. Highlights (1) Using sentence-level topic modeling, we identify 30 distinct and recurring ESG disclosure
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Thewissen, J., Shrestha, P., Arslan‐ayaydin, Ö., & Beibei, Y. (2026). Topics That Matter: ESG Reports and Information Asymmetry. Journal of Financial Research, 1-54. https://doi.org/10.1111/jfir.70053 (Original work published 2026)