Abstract
Proponents of shareholder capitalism argue that mandatory sustainability disclosures increase costs and reduce financial returns. In contrast, advocates of stakeholder capitalism assert that these regulations promote corporate accountability and long-term value creation. This study investigates whether such mandates encourage genuine corporate responsibility or foster superficial compliance. Analysing 3,642 non-financial listed firms across 41 countries (2003–2022) using a staggered difference-in-differences (DiD) approach, we find an 8% overall increase in greenwashing following the adoption of ESG disclosure mandates. Greenwashing rises, particularly when disclosures are mandated by government institutions and when full compliance is required. However, this aggregate trend masks differing firm behaviours: pre-mandate greenwashers reduce greenwashing by 26.9%, while pre-mandate non-greenwashers increase it by 19.7%. This distinction shows that regulatory pressures shape ESG disclosures, with some firms amplifying symbolic compliance while others curbing it. Overall, ESG mandates influence corporate disclosure, but their effectiveness is shaped by firms’ strategic incentives, which, in many cases, remain primarily driven by shareholder wealth maximisation rather than a genuine commitment to stakeholders’ welfare.