ESG Disclosure Intensity and Financial Performance: Text‐Mined Evidence from Vietnam's Manufacturing Sector

ABSTRACT

Environmental, social, and governance disclosure (ESGD) increasingly forms part of firms' communication with external capital providers. However, its association with financial performance remains unclear, especially in emerging markets where reporting formats, assurance practices, and enforcement mechanisms remain uneven. Using annual reports of 201 listed manufacturing firms in Vietnam over 2016–2024, this study constructs a dictionary‐based measure of ESG disclosure intensity, expressed as dictionary‐matched ESG occurrences per 1000 n ‐grams, and examines its association with return on assets (ROA), return on equity (ROE), and Tobin's Q . The central finding is a negative association between ESG disclosure intensity and ROE. This is the only association that retains the same direction across the baseline two‐way fixed‐effects and supplementary dynamic system GMM specifications. The baseline models also show a weakly positive association with ROA and a positive association with Tobin's Q , but neither positive association is corroborated by the dynamic specifications. The results therefore show that the financial associations of ESG disclosure intensity depend on the performance outcome examined and on model specification. For corporate sustainability strategy, the findings suggest that higher ESG disclosure intensity should not be interpreted as uniformly associated with stronger financial performance. Rather, the financial relevance of sustainability reporting depends on the outcome against which it is assessed. The negative ROE association, which runs against the prediction of the monitoring argument, raises a specific theoretical puzzle concerning the relationship between disclosure, shareholders' capital, financing, and the timing of returns.