Public environmental concern and ESG rating divergence: the moderating role of negative online media coverage

This study investigates how public environmental concern influences divergence in firms’ environmental, social, and governance (ESG) ratings. It further examines how negative online media coverage amplifies this relationship, and explores the heterogeneity of underlying mechanisms and effects across regions with varying institutional environments and ecological conditions. Using panel data from Chinese A-share listed firms from 2015 to 2022, this study indicates that public scrutiny significantly exacerbates rating divergence, with negative media coverage amplifying this effect. Economically, a one-standard-deviation rise in public attention leads to a widening of rating divergence equivalent to approximately 4.7% of the sample mean, suggesting that public pressure introduces non-negligible information risks for market participants. Mechanism analysis reveals that public attention drives divergence by encouraging strategic and selective ESG disclosures and by attracting greater agency scrutiny, while media coverage heightens information heterogeneity and interpretive differences. These effects are most pronounced in regions with stringent regulations, high pollution, and low economic development, where media-driven pressure prompts reactive disclosure and widens inter-agency disparities. The findings suggest that regulators, rating agencies, and firms can reduce ESG rating divergence by applying quality management practices – such as benchmarking, auditing, and stakeholder feedback – to ensure disclosures are accurate, transparent, verifiable, and continuously improved.