Anti-corruption campaign and ESG reporting: evidence from local corruption

Abstract

This article investigates the influence of Vietnam’s anti-corruption “blazing furnace” policy, implemented in 2016, as an exogenous shock on the Environmental, Social, and Governance (ESG) reporting of 449 listed companies headquartered in provinces with varying levels of local corruption from 2012 to 2022. ESG reporting is assessed using the content analysis method, which evaluates 28 comprehensive indicators in firms’ annual and sustainability reports. By employing a Difference-in-Differences (DiD) model, the empirical results reveal a significant positive correlation between the anti-corruption campaign and ESG reporting, particularly impactful in the social dimension. Moreover, companies with political affiliations demonstrate heightened responsiveness to anti-corruption measures, highlighting a distinct effect based on corporate connections. These findings imply that Vietnamese firms in provinces with high local corruption may benefit from promoting sustainable practices to foster long-term commitment with stakeholders and society, especially following anti-corruption campaigns.