Principles without prescription: the limits of discretionary stewardship disclosures

Abstract

This study examines stewardship disclosures when institutional investors retain discretion over their content. Disclosure economics, signalling theory, and institutional theory predict that discretionary disclosure frameworks create incentives for investors to provide low-cost symbolic disclosures while underproducing more costly information that identifies genuine stewardship practices. This prediction is tested using a unique dataset of stewardship disclosures by 146 institutional investors operating under Japan’s consistently discretionary stewardship framework. Analysing 438 investor–year observations from 2017, 2021, and 2025, the study finds that stewardship disclosures increased substantially, yet that growth was greater for soft disclosures describing policies and intentions rather than hard disclosures evidencing stewardship infrastructure and activity. The findings suggest that specifying disclosure content is a consequential feature of stewardship regulation.