In the context of greater demand for corporate transparency, there is a growing pressure on boards to produce and communicate information to their investors and stakeholders. The current literature on integrated reporting shows that the provision of ESG information is a crucial factor that improves corporate governance by reducing agency problems. This issue is also critical in emerging economies, and particularly among Latin American firms. The concentration, opacity, and lack of evidence about ESG disclosure in less developed financial markets provide a promising environment to study the implications of board heterogeneity and ownership structure on strategic corporate decisions such as the disclosure of ESG indicators in developing economies. Using Tobit panel data models, we study how these factors affect the extent of ESG disclosure by Chilean listed firms. Our main results suggest that a board’s independence and gender diversity positively influence the extent of disclosure of ESG indicators. Our evidence helps firms concerned with strengthening their board’s features, investors that require screening firms’ ESG risk factors, and supports regulators’ decisions on setting norms regarding the extent of disclosure of ESG information by firms.

Current challenging environments pressure firms to improve their overall ESG performance. However, there is tension between the benefits of ESG disclosure and firm performance. We deepen the understanding of ESG disclosure’s contribution to firms’ cost of debt in an emerging economy context. This issue is critical in Latin America–a region with reduced financing, ample company heterogeneity, and scarce evidence associating ESG disclosure and firms’ debt financing. Using fixed effects models, for the 2015–2020 period, we study Chilean listed firms. We explore two association channels between ESG disclosure and the cost of debt financing. Through a direct channel, greater disclosure relates to a lower cost; however, through an indirect channel, disclosure interacts with growth opportunities–a proxy for firms’ prospective risk–and greater disclosure relates to a higher cost. Hence, evidence suggests that ESG disclosure affects the cost of financing in two opposite directions. Our results delve into how ESG disclosure encloses essential economic implications, particularly in countries that have recently adopted ESG practices: For regulators, on developing rules of ESG disclosure that consider their financial effects; for firms, on enhancing their ESG communications policies; and finally, for creditors, on the need to introduce ESG indicators in their financing decision-making.

Firms are facing pressure to convincingly communicate to stakeholders their environment, society, and corporate governance (ESG) disclosure. In developing countries, where frictions among controlling and non-controlling shareholders are pervasive, the possible dissensus inside boards regarding ESG disclosure remains understudied. We investigate the ways in which boards’ heterogeneity between the interests of controlling groups and the interests of institutional investors influences ESG disclosure of firms in the Latin American context. Using social networks and logit panel data models, we analyze for 2015-17 the probability of ESG disclosure by 124 Chilean listed firms. Our evidence suggests that the influence of controlling shareholders through directorate interlocking has a negative relation with ESG disclosure. Additionally, we observe that the influence of institutional investors on ESG disclosure is not yet critical. Moreover, we find partial evidence of the presence of tension within the boards regarding ESG reporting between the directors that represent controlling shareholders and institutional investors. Considering the importance of institutional investors and the ubiquity directorate interlocking among Latin American’ firms, our results are relevant for regulators involved in advancing the rules of ESG disclosure practices, institutional investors focused on enhancing their ESG investment strategies, and firms engaged in improving the ESG decision-making within their boards.

We study how changes in the structure of a brokers’ transaction network affect the probability with which the returns and volume of the traded financial assets change significantly. We analyze how the dynamics of the brokers’ transaction network are associated with the returns and volume observed in the Chilean stock market. To do this, we construct and validate an index that synthesizes the daily changes of the brokers’ transaction network structure of equity market transactions. We find that the changes of this structure are significantly correlated with variables that describe the local and international economic-financial environments. In addition, changes in the brokers’ transaction network structure are associated with a greater probability of positive shocks of more than two standard deviations in the stock exchange index return and total traded stock volume. These results suggest that the structure of the brokers’ trading relations plays a role in determining the returns and volume of transactions in the Chilean stock market.

Using a unique data set with all the daily transactions from the Santiago Stock Exchange, we develop a novel methodology that combines a network decomposition with a spatial econometrics technique to study how brokers’ characteristics and trading decisions may affect the stock market return. We present suggestive evidence of a mechanism by which structural changes of the transaction network between brokers affect the aggregate returns of the stock market. We find that brokers tend to trade with counterparties with dissimilar intraday selling volume when market return significantly increases. Moreover, brokers with a research department tend to sell to brokers without a research department when the market experiences a considerable increase of its return. From the financial perspective, these results highlight new ways in which intermediaries may affect market equilibrium and the efficiency of the market.