This thesis contains three essays pertaining to the ESG and different stakeholders. In the first essay, we study the effects of insider horizon on firm-level CSR performance and find a positive relation between insider horizon and CSR performance. Further analysis supports the interpretation of good internal governance, rather than the agency problems, on this positive relation. To identify a causal link between insider horizon and CSR performance, we use reductions in managerial career horizons and the rejection of the inevitable disclosure doctrine as exogenous shocks to change the willingness of insiders to pursue long-term value. The heterogeneity analysis shows that the positive effects are more pronounced in firms with a higher proportion of long-term, socially responsible institutional investors, when insiders are on long-term compensation plans, and when firms are under less threat of takeovers. We also observe some real impacts of long-term oriented insiders on several raw CSR metrics, including toxic releases, CSR violations, employee satisfaction and negative ESG incidents. Overall, our findings suggest that insiders with a long-term focus can significantly enhance CSR outcomes.

In the second essay, we explore the portfolio rebalancing of mutual fund managers regarding the climate change exposure of their portfolio firms in response to the 2015 Paris Agreement. Relying on a difference-in-difference approach, we find that fund managers underweight the firms with high exposure to climate change following the Agreement. Furthermore, we show that the stringency of climate polices and the climate change exposure of the funds themselves significantly influences the divestment decisions. Our heterogeneity tests indicate that the divestment effects are stronger for portfolio firms in high-pollution industries and during the Trump administration. Lastly, we find that high-exposure firms respond to the divestments by improving their environmental scores and reducing carbon emissions post the Paris Agreement. Overall, our findings highlight the positive role that institutional investors play in driving the transition toward a green economy.

The third essay concentrates on the green transition in the supply chain. Since the voluntary disclosure policy regarding the supply chain does not mandate customer firms to disclose the information of supplier firms, these customer firms tend to strategically disclose their associations with suppliers with good environmental performance while hiding the relationships with those with bad performance. We find that this selective, green-induced nondisclosure about unsustainable suppliers hampers the green transition within supply chains by limiting the positive influence that customer firms could have on their suppliers' environmental practices. Importantly, customer firms improve their own environmental performance at the cost of their suppliers' environmental outcomes. To establish causality, we use the introduction of greenhouse gas (GHG) emission targets in US states and the implementation of GHG emission trading systems in various regions and countries as exogenous regulatory shocks. Our cross-sectional analysis reveals that the impact of strategic disclosure varies depending on three factors: the involvement of common stakeholders in the supply chain, the environmental pressure on suppliers, and the financial constraints of customer firms. Additionally, we examine the real effects of such strategic disclosures, finding that customers outsource their carbon emissions to hidden unsustainable suppliers. Overall, our findings offer valuable insights into the consequences of strategic disclosure and its broader implications for managing sustainability within the supply chain.