Retail Investor Attention and Corporate ESG Disclosure

ABSTRACT Do retail investors matter for corporate ESG transparency? We measure retail investors’ ESG attention by employing natural language processing to identify ESG‐related inquiries on Chinese investor interactive platforms. Using data on Chinese listed firms from 2010 to 2022, we find that retail investors’ ESG attention promotes corporate ESG disclosure. This result remains robust to endogeneity analyses, alternative estimation strategies, and alternative explanation exclusions. Mechanism analyses attribute this effect to market exit threats and ESG reputation pressure. Furthermore, the baseline effect is more pronounced for non‐state‐owned firms, for firms with higher institutional ownership, for inquiries with more negative sentiment, and for cities with greater public ESG awareness. Additional analyses reveal that the baseline effect is primarily driven by disclosure‐focused inquiries rather than practice‐focused ones. Our findings shed light on the influence of retail investors on corporate ESG transparency in the digital age.