ESG Disclosure and Stigma in ICO : Evidence from Sin Industries

Details

Supervisors

Thewissen, James

Faculty

Louvain School of Management

Degree label

Master [120] en sciences de gestion, à finalité spécialisée
Master [120] : ingénieur de gestion, à finalité spécialisée

Abstract

enThis study examines whether disclosing environmental, social and governance (ESG) information can mitigate the market stigma faced by initial coin offerings (ICOs) operating in so-called 'sin' sectors. Using theories of legitimacy and signalling as a basis, we calculate ESG scores from ICO white papers and compare 'sin' and 'non-sin' projects via propensity score matching and regression analyses. Our findings show that ICOs in 'sin' sectors disclose significantly less ESG information than comparable projects outside these sectors, particularly with regard to environmental and overall ESG dimensions. Furthermore, the disclosure of ESG information does not significantly improve fundraising outcomes for ICOs in sin sectors. These findings suggest that in opaque, lightly regulated ICO markets, ESG communication is insufficient to overcome the legitimacy deficit associated with stigmatised activities. This study contributes to the literature on 'sin' industries, ESG signalling and ICO financing by demonstrating that the effectiveness of ESG disclosure depends on its perceived credibility and contextual appropriateness.