Do retail investors matter? Evidence from climate disclosure

Utilizing data on investor-firm interactions through “Interactive Easy” and “E-interaction”, we explore the significance of retail investors in climate disclosure and provide new evidence on the economic benefits brought by retail investors. We investigate the association between retail investors’ demand for climate-related information and firms’ disclosure of such information. We document that retail investors’ concern for climate-related issues increases corporate climate disclosure, and this impact is persistent. Our findings remain stay consistent after a series of tests, and some identification tests suggest a causal relationship. Further analysis suggests that the increased regulatory pressure on firms and the heightened attention of mangers to climate issues are the primary mechanisms through which retail investors drive listed companies to enhance their climate disclosures. In addition, the higher the firm’s attention to investor inquiries, such as higher response quality and shorter response times, the stronger the positive effect of retail investors on corporate climate disclosure. Taken together, our findings indicate that retail investors play a unique and effective role in increasing corporate disclosure of climate-related information. JEL classification: G30, G32