Economics effects of uneven regulation: Mandatory ESG reporting and competitive

positions of public and private firms

Peter Fiechter
University of Neuchatel

Jörg-Markus Hitz
University of Tübingen

Nico Lehmann
Erasmus University Rotterdam

This version: January 2024

(Please do not cite or circulate without authors’ permission)

ABSTRACT: We investigate the effect of mandatory ESG reporting on the competitive position
of firms within the regulated jurisdiction. Using a difference-in-differences design, we find that
the introduction of ESG reporting mandates in different jurisdictions around the globe
weakened the competitive position of targeted public suppliers, who experience a reduction in
the market share of commercial contracts, while the market share of private suppliers increases.
Further analyses show that these findings are consistent with corporate customers shifting
contracts from regulated public to unregulated private suppliers. This effect is concentrated in
supply-chain contracting relations in which (i) the corporate customer is listed and domiciled
in a jurisdiction with ESG transparency regulation, and (ii) the supplier operates in a
competitive industry. These cross-sectional results are consistent with two non-mutually
exclusive channels: corporate customers’ preference for ESG opaqueness and price
competition effects due to incremental costs of ESG reporting mandates. Overall, our findings
document economy-wide (unintended) consequences of uneven ESG reporting mandates on
the competitive position of regulated vis-à-vis unregulated firms.

JEL: G18, G38, K22, K32, L21, M14, M41, M48

Keywords: ESG; Corporate social responsibility (CSR); disclosure regulation; competition;
business-to-business (B2B); supply-chain contracting
1. Introduction

We ask whether the introduction of mandatory ESG reporting affects the competitive

position of firms within the regulated jurisdiction, specifically the competitive position of

public firms compared to private firms. Transparency regulations have become a popular policy

tool to address corporate externalities and sustainability issues (e.g., Weil et al. 2013;

Christensen et al. 2021). Various jurisdictions around the globe have introduced ESG reporting

mandates. However, these mandates are typically implemented as “uneven” regulation,

targeting public firms but not private firms. The objective of the mandates is to inform investors

and other stakeholders about the impact of firms’ ESG-related activities (e.g., carbon

emissions) and firms’ exposure to ESG risks. Consistent with regulatory objectives, various

studies demonstrate that the introduction of ESG reporting mandates increases affected firms’

ESG transparency (e.g., Ioannou and Serafeim, 2019), stock liquidity (Krüger et al., 2023),

investments from institutional owners (Gibbons, 2023), and firms’ ESG-related activities (e.g.,

Christensen et al., 2017; Chen et al., 2018; Fiechter et al., 2022). More recent research further

addresses the question of how firms within the scope of these mandates shape their ESG

activities (e.g., She, 2022; Lu et al., 2023).

While extant studies suggest that ESG disclosure regulation “works” on the firm-level,

this evidence provides little insights on a more aggregated economy-level. Such aggregate

evidence however is key, especially for policy evaluation, to form conclusions about the overall

desirability of these mandates (Christensen, 2022). An economy-wide perspective also

provides potential inputs to the ongoing political debate about the scope of ESG disclosure

mandates, i.e., which type of firms should be targeted (see e.g., EU NFRD 2014, EU CSRD

2022, SEC 2023). In this paper, we therefore investigate the economic effects of mandatory

ESG reporting at the level of the regulated jurisdictions. Specifically, we aim to provide

evidence on whether introduction of “uneven” ESG reporting mandates affect the competitive

1
position of regulated public versus unregulated private firms within the same economy.1 Our

focus is on business-to-business (B2B) markets, in which public and private suppliers compete

for commercial contracts with corporate customers. A key advantage of the B2B market setting

is the availability of granular data at the contract level for both public and private suppliers.

This data enables us to directly observe changes in the market share of commercial contracts

of public and private firms, reflecting changes in their competitive position.

It is a priori unclear whether and how an ESG reporting mandate affects the competitive

position of public and private suppliers. On the one hand, public suppliers may benefit from

network externalities created by mandated ESG reporting, as ESG performance becomes more

comparable among public firms. Such increased comparability resolves information

asymmetries and potentially reduces cost of capital (Lambert et al., 2007), creating relative

competitive advantages (e.g., access to more or cheaper capital) for public suppliers vis-à-vis

private suppliers. Also, the information contained in mandated ESG disclosures potentially

facilitates corporate customers’ assessment of ESG risks along their supply chains. Uncertainty

about public suppliers’ ESG risks is thus reduced, which potentially increases corporate

customers’ contracting with these public suppliers.

However, introduction of ESG reporting mandates may as well have adverse rather than

positive effects on the competitive position of public suppliers. For example, some corporate

customers, rather than favoring ESG transparency along their supply chain, may prefer to

contract with ESG opaque firms in an attempt to not only conceal current ESG issues along the

supply-chain but also insulate these corporate customers from the revelation of potential future

ESG incidents. Also, regulated suppliers face direct costs of implementing and complying with

1
As ESG reporting mandates typically target publicly listed firms (Krüger et al. 2023; Gibbons 2023), we use
public (private) firms to capture whether a firm is regulated (unregulated) within the same jurisdiction. One
notable exception is the ESG reporting mandate in Sweden, which targets both public and private firms. We
exploit the broader scope of the Swedish ESG regulation in additional analyses to increase confidence in our
interpretation (see Section 3.3).

2
the ESG mandate as well as potential indirect costs such as stakeholder pressure to invest in

ESG or proprietary costs of ESG disclosures (Christensen et al., 2021). These incremental costs

potentially weaken the competitive position of public suppliers, e.g., by reducing their ability

to compete on price. As a result, the market share of public (private) suppliers declines

(increases).

In our empirical tests, we follow Krüger et al. (2023) and Gibbons (2023) by using the

staggered adoption of ESG reporting mandates targeted at public firms, in 35 countries over

the time period 2001 to 2019. We use a difference-in-differences (DiD) regression design to

investigate the effect of introducing ESG reporting mandates on the market share of

commercial contracts of public and private suppliers. Using data from FactSet, we define two

main outcome variables that indicate whether the contracting party is either a public or a private

supplier. The unit of observation in our tests is the supply-chain (contract) level. Treatment

status is assigned to contracts with suppliers incorporated in countries that adopted ESG

reporting mandates, whereas control status is assigned to contracts with suppliers incorporated

in control countries (i.e., countries that did not adopt ESG reporting mandates during our

sample period). This design allows us to examine changes in the relative market share

(proportion of commercial contracts) of public and private suppliers in response to the

introduction of ESG reporting mandates, relative to changes in the control group (i.e., contracts

with suppliers from countries without ESG reporting requirements).

Findings from our main tests show that the market share of public suppliers declines after

the introduction of ESG reporting mandates. In contrast, we find a positive effect for private

suppliers, who experience a concurrent increase in market share. The estimated effects are

economically meaningful, suggesting a decline between 4.3 and 4.7 percentage points in the

market share of public suppliers and an increase between 3.1 and 3.9 percentage points in the

market share of private suppliers in jurisdictions with ESG reporting mandates. These findings

3
indicate that ESG reporting mandates weaken the competitive position of regulated public

firms vis-à-vis unregulated private firms within the same economy.

As ESG reporting regulation does not evolve randomly, we conduct several tests that

collectively aim to increase confidence in our inferences. First, we estimate and plot yearly

treatment effects around introduction of the ESG mandates. The resulting graphical pattern is

consistent with a decrease (increase) of the market share for public (private) suppliers after,

but not before, introduction of the ESG reporting mandates, mitigating concerns about potential

pre-trends in contracting. In addition, we follow prior research and model the timing decision

of the ESG reporting mandate (e.g., Carlin et al., 2023; Bonetti et al., 2023). We do not find

any relation between the timing of the adoption and country-level characteristics that might

affect the relative competitive positions of public and private firms. To account for potential

biases due to treatment effect heterogeneity in staggered adoption designs (deChaisemartin and

d’Haultfoeuille, 2020; Baker et al., 2021), we also conduct “stacked” regressions excluding

already-treated and later-treated observations from the regressions. Results from the stacked

regressions are very similar to our baseline findings.

We further bolster our main findings by exploiting specific institutional settings. For one

thing, we demonstrate that our findings obtain also in the EU NFRD setting, in which a specific

ESG reporting mandate came into force simultaneously across all EU member states and for

which previous literature documents increased ESG transparency and ESG activities (Fiechter

et al. 2022). We then zoom in on the ESG reporting mandate in Sweden, which applies to both

public and private firms and thus represents a rare example of even regulation across these

firms. If the ESG reporting regulation targeted at public firms is the causal driver of our main

findings, i.e., for the observed change in market share of commercial contracts for public versus

private firms, we should not find such an effect for Sweden’s ESG regulation (as the regulation

4
applies to both). Consistent with this, we find neither statistically nor economically relevant

treatment effects for Sweden relative to control countries.2

One interpretation of our main findings is that corporate customers shift contracts from

public to private suppliers in response to the regulation. However, because any change in

contracts with public (private) suppliers by construction affects the proportion of contracts of

private (public) suppliers in the domestic market, there are also potential alternative

interpretations for our findings.3 For example, instead of shifting contracts to domestic private

suppliers, corporate customers who terminate contracts with public suppliers in a regulated

country might shift these contracts to suppliers in unregulated countries, or even chose not to

recontract. In both cases, the market share of private suppliers in the regulated country will

increase although they have not gained any new contracts, because the overall number of

contracts in the regulated jurisdiction (i.e., the size of the domestic market) has decreased.

Therefore, to test whether our findings reflect a shift of contracts from public to private

suppliers, we conduct two tests. First, we more explicitly examine whether our treatment effect

is driven by changes in the size of the domestic market. To do so, we exploit the presence of

other suppliers in domestic markets (e.g., non-profit suppliers or government-related

institutions), which qualify neither as public nor private. If the increase in the market share of

private suppliers is mainly driven by a reduction in the size of the domestic market in the

regulated jurisdiction, we would also expect an increase in the market share of other suppliers

in the same jurisdiction. We thus re-run our main analyses using the market share of other

suppliers as outcome variable, but we find no evidence of a change in the market share for

2
To mitigate concerns that these null-results are due to the smaller sample of treatment observations or due to
other specific institutional characteristics of Sweden, we contrast these results with findings for the ESG
reporting regulation in Norway. Norway is a neighboring country to Sweden with similar institutional
characteristics, but other than in Sweden, the Norwegian ESG disclosure mandate applies to public firms only.
Findings show a significant change in the market share of public and private firms after introduction of the
regulation in Norway compared to control countries. The different findings for Sweden versus Norway are
consistent with the interpretation that the introduction of the ESG reporting mandate, not other factors, cause our
observed changes in competitive position.
3
See section 4 for an illustration example.

5
those other suppliers. This null result rules out that the increase in contracts for private suppliers

is driven by a reduction in the size of the domestic market. Second, we examine whether the

treatment effect is stronger in industries in treated countries with relatively more private firms.

The idea behind this test is that in industries with relatively more private firms, customers

should be more easily able to search for and switch to a private supplier in the same industry

and jurisdiction (i.e., more outside options). The documented cross-sectional variation in our

treatment effect is consistent with this expectation. Taken together, these findings point

towards a net direct shift of contracts from public to private suppliers within the same regulated

jurisdiction.

We conclude our empirical analyses with a set of cross-sectional tests to shed light on

two non-mutually exclusive mechanisms for our documented shifts in market shares: (i)

customers’ preference for ESG opaqueness along their supply chains, and (ii) competition in

suppliers’ markets. We expect the preference for supply-chain opaqueness to be particularly

pronounced for customers that are both listed and located in a country with ESG disclosure

regulation (“ESG exposed customers”). Our tests show that our main treatment effect is

concentrated in treated countries with a high (pre-treatment) industry-level proportion of these

ESG exposed customers. This finding suggests that, consistent with a preference for ESG

opaque supply chains, corporate customers—which are themselves within the scope of an ESG

disclosure regulation—shift contracts from public to private suppliers, thereby insulating their

own mandatory disclosures from current and future ESG issues along the supply chain. In our

second cross-sectional tests, we explore variation in suppliers’ competitive environment, which

we measure based on industry concentration. According to our proposed price competition

channel, any incremental direct or indirect costs (including proprietary costs of disclosure)

associated with the reporting mandate should be more pronounced for suppliers operating in

6
more competitive industries. Consistent with this conjecture, we find that treatment effects are

concentrated in suppliers in industries with a high pre-treatment competition level.

In our last cross-sectional test, we test an implication of both our proposed channels by

asking whether the effects of mandatory ESG reporting on the competitive position of suppliers

varies with their relative importance to customers. Because key suppliers, which provide

specific goods and services, are typically not easily substituted, potential competitive

disadvantages associated with the regulation (e.g., incremental costs or revelation of ESG risks)

are more likely to “tip the scales” for less important supply-chain relations. Consistent with

this conjecture, we find that treatment effects are concentrated in contracts in treated industries

with a high (pre-treatment) proportion of relatively unimportant suppliers.

Our paper makes several contributions. First, we contribute to the growing literature on

the economic effects of ESG disclosure mandates (Chen et al. 2008, Fiechter et al. 2022, Krüger

et al. 2023, Gibbons, 2023, Lu et al. 2023). Our findings complement prior literature by

documenting an economy-wide effect of ESG disclosure mandates, i.e., the competitive

position of regulated public (unregulated private) firms is weakened (strengthened). As such,

our evidence complements prior evidence on firm-level effects such as liquidity improvements,

changes in ownership structure, or real activities. Related, our finding that private firms gain

market shares at the expense of public firms (within a treated jurisdiction) is consistent with

economic consequences of “uneven regulation.” As such, our evidence is of relevance for the

ongoing debate about the scope of ESG reporting mandates. For example, the 2022 CSRD

regulation, which augments the 2014 EU NFRD regulation, increases, among other things, the

scope of the reporting mandate by including large private firms from fiscal year 2025 onwards.

Second, our findings inform the more general debate about the regulatory success of ESG

mandates. So far, the empirical evidence suggests “positive” effects (e.g., increased ESG

activities) for regulated firms. These effects are consistent with the regulators’ objectives of

7
promoting firms’ ESG orientation (see e.g., EU Directive 2014/95, recital 3). However, while

recent studies provide a more nuanced view by pointing out the limitations of ESG

transparency—e.g., regulated firms circumvent disclosure regulation via divestments (Ecker

and Keeve, 2023) or via migration of global supply chains (Lu et al. 2023)—there is scarce

evidence on such unintended consequences of ESG disclosure mandates. In that sense, our

findings that public suppliers experience a relative decline in their market share of commercial

contracts is consistent with ESG mandates creating a “regulatory burden” rather than a

“competitive advantage” for regulated public firms. Our findings thus have important

implications for policy evaluation, as transparency mandates have become an increasingly

popular policy tool to address corporate externalities and sustainability issues (e.g.,

Oberholzer-Gee and Mitsunari 2006; Weil et al. 2013, Christensen et al. 2021, Bonetti et al.,

2023, SEC 2023).

Finally, our findings relate to the growing stream of studies that document side-effects

for private firms from disclosure regulation of public firms. For example, Liu et al. (2023)

show that mandatory adoption of IFRS for listed firms in the EU negatively affected financing

conditions for private EU firms, Badertscher et al. (2013) find that private firms are more

responsive to their investment opportunities in industries with higher public firm presence, and

Breuer et al. (2022) find that mandatory reporting reduces regulated firms’ innovation but has

positive information spillovers to other firms. Our findings complement this literature by

showing that ESG disclosure regulation leads to shifts in the market share of commercial

contracts from public to private firms.

8
2. Sample and data

2.1 Supply-chain setting

We investigate our research question—do ESG reporting mandates affect the competitive

positions of regulated public firms vis-à-vis private firms in regulated jurisdictions?—for

supply-chain relations (B2B markets), in which corporate customers contract with suppliers.

The supply-chain setting provides several features that make it particularly suitable for

addressing our research question.

First, B2B markets are economically important (e.g., Acemoglu et al., 2012; Acemoglu

et al., 2016; Carvalho et al., 2021). For example, suppliers provide, on average, 45 percent of

the value delivered by customer firms to the market (Carter et al., 2021). Second, for the supply-

chain setting, granular data at the contract level is available for both public and private suppliers

(through FactSet Revere), which enables us to directly observe changes in public and private

suppliers’ market share, i.e., their proportion of commercial contracts relative to other suppliers

in the same economy. This rich set of contractual data helps us circumvent the problem that

data about private firms is typically unavailable for most jurisdictions. For example, it is not

possible to use total sales or revenues to calculate market shares in countries where private

firms do not report such data. In addition, observing supply-chain contracts is a simple but

intuitive way to proxy for the suppliers’ share of business activities and revenues in a market.

Closing of contractual agreements typically precedes revenue streams at a granular level, thus

providing an early, fast-moving indicator of shifts in market share and competitive position.4

In addition, contracting data is comparable across countries as well as across public and private

4
In the online appendix Table A4, we show for a sample of 20,946 U.S. supplier-year observations that the number
of (increase in) supply-chain contracts with customers in year t is positively associated with (an increase in)
suppliers’ revenue in year t. As the average contract duration is around one year, this results is consistent with a
direct mapping of contracts into revenues in the same year.

9
firms. Comparability of revenue data, in contrast, is confounded by different accounting

methods used across different countries and types of firms.5

2.2 Mandatory ESG disclosure regulations

We follow Krüger et al. (2023) and Gibbons (2023) by using the staggered adoption of

ESG reporting mandates between 2001 and 2019 that apply broadly to publicly listed firms in

35 different countries. The list of countries with and without ESG reporting mandates is

primarily based on the Carrot & Stick project6, which provides summary information of ESG

policies from over 130 countries. Table 1 gives an overview of all 35 treatment and 29 control

countries. Of the 35 treatment countries, 22 countries adopted comprehensive ESG reporting

mandates, whereas the remaining 13 countries adopted E, S, and G reporting mandates

consecutively. For these consecutive ESG reporting mandates, we follow Krüger et al. (2023)

and define the final implementation as the treatment date. Our results do not change when

excluding these 13 countries from the sample (Online Appendix Table A2).

Table 1 also reports the number of supply-chain contracts per supplier type (e.g., public

or private) for each country. In terms of sample concentration, we find that UK has the largest

share of observations in our treatment sample (13.3%), whereas the U.S. has the largest share

of observations in our control sample (69.6%).7

[Table 1 about here]

5
This is particularly the case for private firms. While accounting guidance for public firms has over recent years
converged, with a large fraction of firms preparing financial statements according to IFRS, many jurisdictions
prescribe their version of domestic GAAP for private firms.
6
https://www.carrotsandsticks.net/
7
Krüger et al. (2023) reports a similar sample concentration, with UK dominating the treatment sample (with
12.7% of treatment group observations) and with the U.S. dominating the control sample (with 54.1% of control
group observations).

10
2.3 Sample

Our sample is based on supply-chain (contract) relations provided by FactSet Revere.

This dataset provides rich information about each individual supply-chain relation, including,

e.g., information about customers’ and suppliers’ country of origin and industry, starting point

and duration of the relation, and about the relative importance of the contracting parties. Most

importantly for our research design, this dataset also provides information about the type of

suppliers and customers, allowing us to identify public, private, and other suppliers (i.e., non-

for-profit suppliers, government-related institutions, or universities). The unit of observation

in our main tests is the supply-chain (contract) level. In total, our final sample includes 355,733

supply-chain relations in the treatment countries and 451,567 supply-chain relations in the

control countries.

Table 2 provides summary statistics for our main variables across treatment and control

countries. In both samples, public suppliers account for the majority of contracts (82% in

treatment countries and 71% in control countries). We also see similar distributions for most of

our independent variables across treatment and control countries (e.g., in terms of contract

duration, share of contracts within the same industry, and importance of suppliers vis-à-vis

their customers). Because of the staggered adoption of ESG reporting regulations over time in

our treatment countries, observations from those treatment countries also serve as control

observations (see Section 3.1).

[Table 2 about here]

3. Mandatory ESG reporting and market share of public and private suppliers

3.1 Baseline results

To examine the effects of introducing ESG reporting mandates on the market share (i.e.,

proportion of commercial contracts) of public and private suppliers, we use a generalized DiD

11
approach. We estimate different variants of:

𝑦 = 𝛽1 + 𝛽2 𝑇𝑟𝑒𝑎𝑡𝑒𝑑 + ∑ 𝛽𝑘 𝐹𝑖𝑥𝑒𝑑 𝐸𝑓𝑓𝑒𝑐𝑡𝑠𝑘 + 𝜀 (1)

where y is either Public supplier (indicator variable equal to one if the supplier in the supply-

chain link is public, and zero otherwise) or Private supplier (indicator variable equal to one if

the supplier in the supply-chain link is private, and zero otherwise) as the dependent variable.

The unit of observation is the individual supply-chain (contracting) relation. 𝑇𝑟𝑒𝑎𝑡𝑒𝑑 is an

indicator variable that equals 1 for all contracts with suppliers in treated countries in the post

period, and 0 otherwise. Fixed effects include year and supplier-country fixed effects. These

fixed effects also subsume the separate indicators for 𝑃𝑜𝑠𝑡 and 𝑇𝑟𝑒𝑎𝑡𝑚𝑒𝑛𝑡. The main

coefficient of interest is 𝛽2, which measures the effect of introducing ESG reporting mandates

on the market share of public (or private) suppliers in regulated countries, relative to the market

share of public (or private) suppliers in control countries. We estimate equation (1) using a

linear probability model and heteroscedasticity-robust standard errors clustered at the country

level.8

To circumvent the problem of “bad controls” encountered in staggered DiD regressions

(e.g., Sant’Anna and Zhao, 2020; Baker et al., 2022), our analyses focus on results from

estimating our model (1) without control variables (baseline model). To allow for sensitivity

we also report findings from augmented versions of our baseline model, where we add control

variables for (i) relationship-specific characteristics (i.e., duration of relationship, whether

customer and supplier are within the same industry, whether customer and supplier are within

the same country), (ii) supplier-specific characteristics (i.e., whether supplier discloses the

supply-chain link, whether supplier is important for customer), and (iii) B2B market-specific

characteristics (i.e., supplier’s HHI industry concentration, customer’s HHI industry

concentration). We also gradually add the following fixed effects to our augmented models:

8
Our findings are robust to alternative clustering approaches (see Online Appendix Table A3).

12
customer country fixed effects, supplier industry-by-year fixed effects, customer industry-by-

year fixed, and customer fixed effects.9 By including customer fixed effects, we establish a

within customer perspective and effectively test whether the same customer reduces or

increases contracting with public (private) suppliers in response to the introduction of ESG

reporting mandates. The price of this within customer perspective is that we cannot observe

potential shifts in contracting at the broader market-level (e.g., new corporate customers that

contract with private instead of public suppliers).

Table 3 reports findings from estimating four different specifications of our DiD model,

our baseline model without controls, and three augmented models in which we gradually add

further fixed effects and the control variables. We use two outcome variables: Public supplier

(1/0) in Panel A and Private supplier (1/0) in Panel B. The findings offer four main insights.

First, the estimated average treatment effect in Panel A, Treated, is negative and significant for

each specification (coefficients between -0.040 and -0.046, and t-stats between -2.27 and -2.51)

when using Public supplier (1/0) as outcome variable. These findings indicate a decrease in the

market share of commercial contracts for public suppliers in jurisdictions that introduced an

ESG reporting mandate.

Second, results in Panel B of Table 3 show a significantly positive treatment coefficient

in each specification (coefficients between 0.030 and 0.038, and t-stats between 2.86 and 3.27)

when using Private supplier (1/0) as outcome variable. These findings suggest that concurrent

to the decline in the market share of public suppliers, the market share of private suppliers

increases in jurisdictions which implemented ESG reporting mandates. Accordingly, the

findings in Panels A and B indicate that ESG reporting mandates weaken (strengthen) the

9
Including these additional fixed effects reduces our sample size by around 21% due to the deletion of
singletons.

13
competitive position of regulated public (unregulated private) suppliers within the regulated

jurisdiction.

Third, moving from the first (baseline) model to the fourth model with extended fixed

effects and covariates does not appear to affect the economic significance of the results. As the

changes in the effect sizes after including additional fixed effects and covariates are very

modest, any potential selection on unobservable characteristics would have to have little

correlation with the included observable characteristics or be quite large to explain all of the

estimated treatment effect (e.g., Altonji et al., 2005; Bellows and Miguel, 2009). This

interpretation is also consistent with the low sensitivity of our baseline results towards the

choice of control variables and fixed effects.

Fourth, the results are also economically meaningful indicating a relative decline

(increase) in the share of public (private) suppliers between 4.3 and 4.7 percentage points (3.1

and 3.9 percentage points). Relative to the sample means in the treated countries (see Table 2),

this translates into a decline of over 5% in the share of public suppliers, and an increase of over

21% in the share of private suppliers in jurisdictions that implemented ESG reporting

mandates.

[Table 3 about here]

3.2 Identifying assumptions

3.2.1 Event study DiD

We conduct various tests to gauge the validity of our baseline findings, especially with

respect to interpreting our findings as causal effects. First, a key identifying assumption in our

research design is the parallel trends assumption, i.e., the assumption that the trends (or

changes) in the outcome variable across treated and control observations are the same absent

treatment (e.g., Atanasov and Black, 2016). While this assumption cannot be formally tested,

14
we gauge its plausibility by examining pre-trends in the outcome variable across treatment and

control observations (e.g., Atanasov and Black, 2016). Significant pre-trends would suggest a

violation of the parallel trends assumption. We estimate a modified version of our baseline DiD

model using yearly treatment indicators, with the year before introduction of the ESG reporting

mandate as the base year.

The results of these analyses are reported in Figure 1a, where we plot our point estimates

of yearly treatment effects along with 95% confidence intervals for our four different model

specifications. Consistent with no violation of the parallel trends assumption, Figure 1a shows

no significant differences in the market shares of public suppliers across treatment and control

countries in the years prior to introduction of the ESG reporting mandate. This is particularly

true for the years just before the mandate (from years −3 to year −1), in which period a potential

downward trend in contracting would especially challenge the validity of the parallel trend

assumption. In comparison, Figure 1a shows a relative decline in share of contracting with

treated suppliers after the mandate, a decline that kicks in as early as in the year +1 after the

regulation, and continues until the year +5. The point estimate in the years >5 becomes

insignificant. We caution, however, that the binning (grouping) of time periods in the tails of

our sample period likely introduces estimation noise (e.g., not all treatment countries have

relative time periods of +6 or larger, see Table 1).

Figure 1b shows the trend in market share for private suppliers. Again, there is no

indication of a pre-trend in the market share of private suppliers across treatment and control

countries, in particular for the immediate years before introduction of the mandate. After the

introduction of the mandate, we observe a slow but gradual increase in the market share of

commercial contracts for private suppliers, starting in t+1until t+5.

In sum, Figure 1 is generally consistent with a decline (increase) in the market share of

commercial contracts for public (private) suppliers after, not before, the introduction of the

15
ESG reporting mandates. However, as this analysis cannot fully alleviate concerns about

potential pre-trends in our outcome variable, we conduct further analyses to increase

confidence in our inferences in the remaining in the remaining Section 3.2.

[Figure 1 about here]

3.2.2 Timing of the staggered adoption

Given the staggered nature of the adoption of ESG disclosure mandates across countries

and jurisdictions in our setting, the parallel trends assumption requires that countries’ timing of

the adoption is independent of factors that might otherwise affect the market share of public

and private suppliers. Our pre-trend analysis in Figure 1 provides some comfort to that end, as

endogenous treatment timing often results in significant pre-trends. However, endogenous

treatment timing might also affect the trends in the post period, which is not directly testable.

For example, the parallel trends assumption might be violated in the post period if the timing

of our ESG disclosure mandates perfectly lines up with changes in the B2B market or changes

in the relative competitive positions of public and private suppliers in the treatment

jurisdictions.

To shed light on the timing of the staggered adoption, we follow prior research and model

the timing (or adoption) decision (e.g., Carlin et al., 2023; Bonetti et al., 2023). We focus on

country-level characteristics that might affect the relative competitive position of public and

private suppliers. In Figure 2, we show graphically that the timing of the adoption is unrelated

to various country-level variables, including (i) the suppliers’ industry concentration, (ii) the

market share of public suppliers, and (iii) the market share of private suppliers.

[Figure 2 about here]

Finally, Figure 2 also shows that the timing of the adoption, and thus allocation of

countries into our treatment events, is unrelated to FactSet Reverse’s country-specific

16
coverage. This mitigates concerns that coverage changes over time by FactSet generates trends

in the market share of public and private suppliers that are concurrent with the staggered nature

of the treatment.

3.2.3 Treatment effect heterogeneity

Recent work in econometrics suggests that staggered DiD designs can produce biased

estimates in the presence of treatment effect heterogeneity, i.e., heterogeneity either in the

cross-section or over time (for an overview, see Baker, Larcker, and Wang, 2021). This work

proposes several solutions to mitigate this potential bias. One central feature of these solutions

is to modify the set of control observations in a way that ensures that the estimation process is

not contaminated by treatment effect heterogeneity (e.g., Callaway and Sant’Anna, 2020;

Cengiz et al., 2019; Sun and Abraham, 2020). We follow this literature, particularly Cengiz et

al. (2019) and Desphande and Li (2019), and use a stacked regression estimator to account for

treatment effect heterogeneity. The idea is to create event-specific datasets that include

observations from the focal treatment event but exclude post-observations from later-treated or

already-treated units. The final regression estimation is then performed on a stacked dataset

(N=6,887,207), which includes all event-specific datasets and aligns the timeline of these

datasets in a relative way (e.g., t-1 or t+1 relative to the adoption date). In a final step, to account

for the stacked nature of the final dataset, it is necessary to saturate the fixed effects and cluster

dimensions with indicators for the specific stacked datasets.

The results are reported in Online Appendix Table A1. Consistent with the baseline

results in table 3, the estimated average treatment effect is negative and significant when using

Public supplier (1/0) as outcome variable. Likewise, we find a positive and significant

treatment effect when using Private supplier (1/0) as outcome variable. Although the statistical

significance levels are slightly higher based on the stacked DiD estimator, the effect sizes are

17
remarkably similar across the staggered DiD and the stacked DiD estimators (e.g., -0.043 in

the staggered model vs. -0.045 in the stacked model for our baseline specification with Public

supplier (1/0) as outcome variable, and 0.031 in the staggered model vs. 0.030 in the stacked

model for our baseline specification with Private supplier (1/0) as outcome variable).

3.3 Leveraging specific ESG reporting settings

To increase confidence in our main findings, we re-run our main analyses for two specific

ESG reporting settings. The EU’s NFRD setting represents a non-staggered, cross-country

adoption of a specific ESG reporting mandate (Section 3.3.1), while the Swedish setting is

unique in including both public and private firms into the scope of the ESG reporting mandate

(Section 3.3.2).

3.3.1 The EU’s Non-Financial Reporting Directive (NFRD)

The NFRD, which was adopted by the EU legislative in 2014, went into force across

all EU member states for fiscal years 2017, resulting in the simultaneous widespread, cross-

country and cross-industry adoption of mandatory “non-financial” (ESG) reports. Fiechter et

al. (2022) use DiD analyses with U.S. control firms to demonstrate that the NFRD lead to

relative increases in EU (treated) firms’ CSR transparency and CSR activities. We adopt the

Fiechter et al. (2022) research design, which allows us to estimate our main DiD model for a

non-staggered setting of mandatory ESG reporting. Accordingly, we have no concerns with

staggered adoption in this setting. In addition, we are able to exploit the particular timeline of

the adoption of the NFRD (i.e., passage of the NFRD vs. entry-into-force of the NFRD). For

the period 2011-2020, we estimate our yearly DiD model (see Section 3.2.1). We use 2013 as

the baseline year, the year before the NFRD was passed (Directive 2014/95).

18
 The results of these analyses are reported in Figures 3a and 3b, where we plot our point

estimates of yearly treatment effects along with 95% confidence intervals using as dependent

variable the proportion of public (Figure 3a) and private (Figures 3b) suppliers, respectively.

Consistent with our main findings, Figure 3a shows that public EU public suppliers

experienced a relative decline (compared to U.S. control firms) in the market share after the

NFRD came into force in 2017. Coefficient estimates are significant for all years from 2017-

2019. Point estimates for EU private suppliers, in contrast, show a sharp increase in market

shares from 2017 onwards. Taken together, these results are in line with our main findings that

introduction of ESG reporting mandates affect the competitive positions of public and private

suppliers within regulated jurisdictions.

[Figure 2 about here]

3.3.2 Even regulation setting: The case of Sweden

To further increase confidence in our main findings, we zoom into a specific country-

level ESG mandate, Sweden, which allows us to conduct falsification tests. This is because in

contrast to our other ESG reporting mandates, the scope of Sweden’s ESG regulation includes

both public and private firms (Vazquez and Martinez 2023). If the uneven ESG reporting

regulation targeted only at public firms is the causal driver for our main finding (i.e., change in

market share of commercial contracts for public and private firms), we should not find such an

effect for Sweden’s ESG reporting mandate, as the mandate applies to both. Consistent with

this idea, results in Panel A of Table 4 do not suggest any effects (neither statistically nor

economically) for Sweden relative to control countries.

To mitigate potential concerns about the small sample of treatment observations in the

Sweden test, we contrast these null-results to the ESG reporting regulation in Norway. The idea

is that Norway is a neighboring country to Sweden with similar institutional characteristics,

19
but compared to Sweden, Norway’s ESG reporting mandate applies to public firms only.

Results in Panel B of Table 4 show significant treatment effects—i.e., a decrease (increase) in

the market share of public (private) suppliers—in Norway compared to control countries. These

different findings for Sweden versus Norway are consistent with the interpretation that the

introduction of the ESG reporting mandate, not other factors, cause our observed changes in

competitive position.

[Table 4 about here]

4. Are contracts shifted from public suppliers to private suppliers in response to

mandatory ESG reporting?

On the surface, one interpretation of our baseline results—the market share of public

suppliers declines and the market share of private suppliers increases—is that corporate

customers respond to ESG reporting regulation by terminating contracts with public suppliers

and then shifting these contracts to private suppliers in the domestic market. However, we

caution that there are other interpretations to our findings. This is because, by construction, any

change in contracts with public (private) suppliers at the same time affects the proportion of

contracts of private (public) suppliers in the domestic market. For example, instead of shifting

contracts to domestic suppliers, corporate customers who terminate contracts with public

suppliers in a regulated country might shift these contracts to suppliers in unregulated

countries, or they may even choose not to recontract at all, e.g. due to restrictive switching

costs. In both cases, the market share of private suppliers in the regulated country will increase

although they have not gained any new contracts, because the overall number of contracts in

the regulated jurisdiction (i.e., the size of the domestic market) has decreased.

For illustration, suppose treatment country A has in total 100 supplier contracts in place

in the pre-period, of which 70 supplier contracts are with public suppliers, 20 contracts are with

20
private suppliers, and ten contracts are with other suppliers (i.e., non-profit organizations,

government-related institutions, or universities). After the adoption of the ESG reporting

mandate in country A, corporate customers cut ten contracts with public suppliers, leading to

60 contracts with public suppliers in the post period. The number of contracts with both private

(20) and other (10) suppliers remains unchanged, but the total number of supplier contracts in

the post period is now reduced to 90. The market share of public suppliers in country A thus

drops from 70% (70/100) in the pre-period to 66.7% (60/90) in the post period, whereas the

market share of private suppliers increases from 20% (20/100) in the pre-period to 22.2%

(20/90) in the post period. Likewise, the share for other suppliers increases from 10% (10/100)

to 11.1% (10/90). In this illustration, the 2.2 percentage points increase in market share for

private suppliers is not a result of a direct contract shifting but due to the overall lower

contracting volume (size of the domestic market), which declined from 100 to 90 contracts.

Against this backdrop, we conduct two sets of tests to gauge whether our main findings

are consistent with an actual shift of contracting volume from public to private suppliers. First,

we test whether our results are driven by changes in the size of the domestic market. We exploit

the presence of other suppliers in domestic markets, i.e., suppliers which qualify neither as

public nor private. These other suppliers are less likely to compete for the same contracts with

public suppliers. If the increase in the market share of private suppliers that we observe in our

main findings is solely caused by a reduction in the size of the domestic market (e.g., 2.2

percentage points increase due to the decline in overall contracts from 100 to 90 as illustrated

above), we would also expect to see an increase in the market share of other suppliers in the

same jurisdiction for the same reasons (e.g., 1.1 percentage points increase as illustrated

above). We therefore re-run our main analyses using the market share of other suppliers (Other

supplier (1/0)) as outcome variable.

21
 Results in Panel A of Table 5 show no evidence of a change in the market share of other

suppliers in regulated jurisdictions. This null result rules out the explanation that one of our

main findings, the increase in market share for private suppliers in response to ESG reporting

regulation, is driven by a reduction in the size of the domestic market. At the same time, this

finding is consistent with a direct net shift of contracts from public to private suppliers in the

regulated jurisdiction.

[Table 5 about here]

In our second set of tests, we ask whether our main findings vary with the availability of

private suppliers. The idea is that corporate customers are more likely to switch contracts from

public to private suppliers if there are some private suppliers offering comparable products and

services. We proxy this existence of “outside options”, i.e., the availability of private suppliers

within the same industry by using the number of private supplier contracts per country-industry.

Findings reported in Panel B of Table 5 show that the reductions in contracts are concentrated

in those public suppliers that operate in industries with a relatively high availability of private

suppliers, i.e., more outside options. Consistent with this, the gain in contracts is confined to

suppliers in these very industries. These results indicate that corporate customers react to the

ESG regulation by reducing contracts with public suppliers, especially when there are more

options of alternative private suppliers within the same industry.

Taken together, the findings in this section are consistent with a net direct shift of

contracts from public to private firms.

5. Economic mechanisms

Having established our main findings, which are consistent with a shift of contracts from

public to private suppliers, we now move on to explore in more depth the underlying economic

mechanisms at work. Specifically, we conduct cross-sectional analyses to shed light on two

22
non-mutually exclusive explanations for the changes in the market shares—i.e., changes in the

competitive position—for public and private suppliers that we observe in response to ESG

reporting regulation: corporate customers’ preference for ESG opaqueness (section 5.1), and

competition in suppliers’ markets (section 5.2). We then investigate an implication of both our

proposed channels by asking whether the documented impact of ESG reporting regulation on

public and private suppliers is contingent on the economic importance of suppliers to customers

(section 5.3).

5.1. Customers’ preference for ESG opaqueness

One explanation for our main findings is that corporate customers prefer ESG opaqueness

over ESG transparency along their supply-chain, e.g., to conceal current ESG issues or to

insulate themselves from the revelation of future ESG incidents along the supply-chain.

According to this mechanism, corporate customers would shy away from ESG transparency

imposed by ESG reporting mandates on their suppliers. We posit that such an increase in ESG

transparency of public suppliers is mostly relevant for customers who need to be ESG

transparent themselves, i.e., customers subject to ESG reporting regulation. These regulated

customers are typically required to include in their ESG reports information on their supply

chains, e.g., on greenhouse gas emissions or labor safety, along these value chains. This may

be the very information these customers would rather obfuscate. Therefore, if this “preference

for ESG opaqueness” mechanism is at work in explaining our main findings, we expect our

main treatment effects to be more pronounced for corporate customers subject to ESG

transparency regulation.

We put this mechanism to the test by exploiting information on the corporate customers’

country of domicile (i.e., treated country with ESG transparency regulation vs. control country)

and listing status (i.e., listed corporate customers vs. private corporate customers). We amend

23
equation (1) by estimating a total effects model with the partitioning variable equal to one

(zero) for contracts in a treated country with a pre-treatment, industry-level above (below)

mean share of corporate customers that are both listed and located in a country with ESG

disclosure regulation. We label the two partitioning variables as High_ESG_Exposure and

Low_ESG_Exposure.

Table 6 reports findings for our “preference for ESG opaqueness” tests. Results for model

(1) show a significant negative coefficient of -0.072 (t-stat = -3.30) on High_ESG_Exposure

while the coefficient for Low_ESG_Exposure is insignificant. The difference across the two

partitions is highly significant (p-value from F-test = 0.000). This results indicates that

treatment effects are concentrated in contracts in a treated jurisdiction that had a higher pre-

treatment, industry-level share of corporate customers that are both listed and located in a

country with ESG disclosure regulation. In other words, the decrease in market share of public

suppliers is strongest when customers are themselves subject to mandatory ESG reporting

requirements. The results in model (2) are consistent with the findings in model (1), suggesting

that the increase in market share for private suppliers is concentrated in contracts with relatively

more listed customers in regulated countries. Taken together, these findings indicate that

regulated customers respond to the introduction of ESG reporting regulation by shifting

contracts from public suppliers to private suppliers in their domestic market.

[Table 6 about here]

5.2. Competition in suppliers’ markets

A second, non-exclusive explanation for our main findings is that ESG reporting

mandates create costs that potentially weaken the competitive position of affected firms, in

particular by reducing suppliers’ ability to compete on price. As discussed in the introduction,

an ESG reporting mandate can impose various incremental costs for affected firms. These costs

include direct costs of complying with the ESG reporting requirements, and indirect costs such

24
as ESG investment pressure from stakeholders (Chen et al. 2018; Fiechter et al. 2022), or costs

from revealing competitive advantages, i.e. proprietary costs (Christensen et al. 2021).

To shed light on this potential mechanism, we investigate whether our main treatment

effect varies with the level of competitive pressure at the suppliers’ industry level. We measure

the level of (price) competitiveness using the concentration within the suppliers’ industry and

country (e.g., Beyer et al. 2010, Lang and Sul 2014). The intuition of these tests is that price

competition effects resulting from introduction of an ESG reporting mandate should be more

pronounced in highly competitive environments. This is because in such a highly competitive

environment, suppliers face more price competition and are therefore less able to pass on their

increased costs to corporate customers, i.e. customers can more easily switch to competitors

when suppliers eventually raise prices in response to incremental costs.

For our tests, we measure industry concentration using the Herfindahl-Hirschman Index

(HHI) per country and industry. Based on mean splits, we create two partitioning variables,

High_Competition and Low_Competition. We then test whether our treatment effects differ

across this partition. In Panel B of Table 6, models 1 and 2 show that the decrease (increase) in

market share for public (private) suppliers is concentrated in supply-chain contracting relations

with suppliers facing relatively high industry competition, i.e., low industry concentration. The

difference in coefficients is significant at the 1%-level.10 The findings are consistent with the

proposed competition mechanism due to incremental costs of ESG disclosure mandates, which

ultimately weaken the competitive position of targeted firms.

10
To put this finding into context, we also test whether our main treatment effects vary with the corporate
customers’ competitive environment. The idea is that price competition effects due to incremental costs of the
ESG reporting mandate should play less of a role at the customer-level as compared to the supplier-level where
these costs actually incur. Consistent with this, untabulated results do not suggest that different levels of
competition at the customer-level explains our findings.

25
5.3 Economic importance of suppliers

For both of our proposed economic mechanisms, customers’ preference for ESG

opaqueness and supplier competition, we expect the effects to vary with the relative importance

of suppliers to corporate customers. A key supplier that supplies important or specific goods

and services is hard to substitute in spite of a customer’s preference for lower prices or for less

ESG transparency. Therefore, we expect that our main treatment effects are concentrated in

customer-suppliers-relations in which the supplier is relatively unimportant to the corporate

customer.

Based on various information about the relative importance of suppliers to their

customers, we define two partitioning variables, High_Importance and Low Importance.11

Panel C of Table 6 shows that decrease (increase) in market share for public (private) suppliers

is concentrated in supply-chain relations in which the supplier is relatively unimportant, i.e.,

Treated×Low_Importance. The difference across partitions is significant at the 1%-level. Taken

together, the findings in Panel C of Table 6 suggest that ESG reporting mandates weaken the

competitive position of relatively unimportant public suppliers. The findings also increase

confidence in our proposed explanations (channels) why ESG reporting mandates impact

suppliers’ competitive positions. That is, potential competitive disadvantages associated with

an ESG reporting mandate (e.g., incremental compliance costs or revealed ESG risks) affect

customer-supplier-relations only if the supplier is relatively unimportant to the customer.

11
Specifically, economic importance of the supplier is measured as the sum of the following three sub-
measures: (i) supply-chain link is disclosed by customer, (ii) more industry competition among customers than
suppliers, and (iii) supplier is important for customer based on FactSet Ranking. We then define
High_Importance (Low_Importance) if the pre-treatment proportion of economic important suppliers per
country-SIC is above (below) mean.

26
6. Conclusion

In this paper, we explore jurisdiction-wide market effects of mandatory ESG reporting

by investigating the impact of these regulations on the relative market shares of public and

private suppliers in B2B markets. Using granular data on customer-supplier contracts, we find

that the staggered adoption of ESG reporting mandates for public firms between 2001 and 2019

in 35 different countries had an economically meaningful impact on these domestic markets,

as public suppliers lost contracts, while contracts for private suppliers increased. Our cross-

sectional results provide evidence for two non-mutually exclusive mechanisms: (i) ESG

regulated corporate customers shift contracts from public to private suppliers, consistent with

a preference for ESG opaque over ESG transparent supply chains, and (ii) adverse price

competition effects for treated suppliers due to incremental direct and indirect costs associated

with the ESG reporting mandate. We also show that treatment effects are concentrated in

contractual relations with suppliers of low importance to their corporate customers.

Our findings are subject to limitations. First, we note that despite our efforts to ascertain

causality—including event study DiD analyses, modelling the timing of adoption decisions,

stacked regression designs, and subsample findings from the Swedish setting—we cannot

ultimately rule out that our findings are also driven by factors other than ESG reporting

regulation, specifically by other concurrent regulatory initiatives discriminating between public

and private firms. Second, we note that we have shed little light on the reasons explaining the

documented shifts in market share. While avoiding ESG transparent suppliers appears to be

one principal motive for the observed shifting in contracts, various other explanations,

including price competition effects, likely play a role in explaining changes in the competitive

position of regulated firms. More research on these mechanisms appears worthwhile. Finally,

because of our data structure and empirical design, our analyses and inferences focus on

competition effects for domestic markets in regulated jurisdictions. However, ESG

27
transparency regulation may also affects non-regulated jurisdictions. Therefore, we cannot

draw inferences about comprehensive, cross-jurisdiction competition effects of ESG disclosure

regulation, pointing at another avenue for future research.

These limitations aside, our paper introduces a novel perspective to the nascent literature

on ESG reporting regulation by demonstrating economy-wide effects of such regulation on

competitive positions of targeted public firms and non-targeted private firms. More research

on such effects appears worthwhile and important to improve our understanding of the complex

effects of ESG reporting regulation, in particular to gauge the efficiency and effectiveness of

such regulation as a means of achieving regulatory and societal ESG objectives.

28
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 Figure 1. Event study DiD
Figure 1a. Public suppliers

Figure 1b. Private suppliers

Notes: This figure illustrates treatment effects around the adoption of ESG reporting mandates. The point
estimates are generated by estimating variants of the following regression model (without subscripts):

𝑌 = 𝛽0 + 𝛽1 𝑇𝑟𝑒𝑎𝑡𝑒𝑑𝑡≤−6 + 𝛽2 𝑇𝑟𝑒𝑎𝑡𝑒𝑑𝑡−5 + 𝛽3 𝑇𝑟𝑒𝑎𝑡𝑒𝑑𝑡−4 + 𝛽4 𝑇𝑟𝑒𝑎𝑡𝑒𝑑𝑡−3 + 𝛽5 𝑇𝑟𝑒𝑎𝑡𝑒𝑑𝑡−2

+ 𝛽6 𝑇𝑟𝑒𝑎𝑡𝑒𝑑𝑡0 + 𝛽7 𝑇𝑟𝑒𝑎𝑡𝑒𝑑𝑡+1 + 𝛽8 𝑇𝑟𝑒𝑎𝑡𝑒𝑑𝑡+2 + 𝛽9 𝑇𝑟𝑒𝑎𝑡𝑒𝑑𝑡+3 + 𝛽10 𝑇𝑟𝑒𝑎𝑡𝑒𝑑𝑡+4
+ 𝛽11 𝑇𝑟𝑒𝑎𝑡𝑒𝑑𝑡+5 + 𝛽12 𝑇𝑟𝑒𝑎𝑡𝑒𝑑𝑡≥+6 + ∑ 𝛽𝑗 𝐶𝑜𝑛𝑡𝑟𝑜𝑙𝑠𝑗 + ∑ 𝛽𝑘 𝐹𝑖𝑥𝑒𝑑 𝐸𝑓𝑓𝑒𝑐𝑡𝑠𝑘 + 𝜀

As we omit the DiD estimator for t-1, the first year prior to the adoption of the ESG reporting mandate serves as
the benchmark period. Each point estimate thus reflects a year-specific treatment effect in comparison to the
benchmark period. The (coloured) shades indicate point estimates and the lines represent 95 percent confidence
intervals.

32
 Figure 2. Do country-level characteristics predict the timing of the regulation?
Figure 2a. Suppliers’ industry concentration Figure 2b. Market share of public suppliers

Figure 2c. Market share of private suppliers Figure 2c. FactSet Revere’s country coverage

Notes: This figure shows scatter plots of the timing of countries’ adoption of ESG reporting mandates. We have
35 countries in our treatment sample, that fall within 16 staggered treatment waves (see Table 1). Group of
Adoption, is equal to 1 for the earliest adopting countries, 2 for the second earliest adopting countries, and so on.
Suppliers’ industry concentration measures the industry-level supplier concentration (based on the share of
contracting), which is then aggregated at the country-level. FactSet Revere’s country coverage measures the
country-level coverage breadth of FactSet Revere (i.e., number of supply-chain relations with suppliers in our
treatment countries). Reported coefficients and p-values are taken from bootstrapped Poisson regressions (with
500 repetitions). Results are similar when using OLS estimation.

33
 Figure 3. Event Study DiD for the NFRD Setting (Fiechter et al., 2022)
Figure 3a. Public suppliers

Figure 3b. Private suppliers

Notes: This figure illustrates treatment effects around the adoption of the EU NFRD, which was passed in 2014
and came into effect in 2017 (see Fiechter et al., 2022). The point estimates are generated by estimating variants
of the following regression model (without subscripts):

𝑌 = 𝛽0 + 𝛽1 𝑇𝑟𝑒𝑎𝑡𝑒𝑑2011 + 𝛽2 𝑇𝑟𝑒𝑎𝑡𝑒𝑑2012 + 𝛽3 𝑇𝑟𝑒𝑎𝑡𝑒𝑑2014 + 𝛽4 𝑇𝑟𝑒𝑎𝑡𝑒𝑑2015 + 𝛽5 𝑇𝑟𝑒𝑎𝑡𝑒𝑑2016

+ 𝛽6 𝑇𝑟𝑒𝑎𝑡𝑒𝑑2017 + 𝛽7 𝑇𝑟𝑒𝑎𝑡𝑒𝑑2018 + 𝛽8 𝑇𝑟𝑒𝑎𝑡𝑒𝑑2019 + 𝛽9 𝑇𝑟𝑒𝑎𝑡𝑒𝑑2020 + ∑ 𝛽𝑗 𝐶𝑜𝑛𝑡𝑟𝑜𝑙𝑠𝑗

+ ∑ 𝛽𝑘 𝐹𝑖𝑥𝑒𝑑 𝐸𝑓𝑓𝑒𝑐𝑡𝑠𝑘 + 𝜀

As we omit the DiD estimator for 2013, the first year prior to the passage of the NFRD serves as the benchmark
period. Each point estimate thus reflects a year-specific treatment effect in comparison to the benchmark period.
The (coloured) shades indicate point estimates and the lines represent 95 percent confidence intervals.

34
 Table 1. Sample overview

Panel A. Treatment countries

Country/Region Mand. All-at- Issued No # % # Public # Private # Other
ESG once by comply- Supply- suppliers suppliers suppliers
disc. disc.? govern or- chain-
year inst.? explain relations
disc.?
Argentina 2008 1 1 1 1,259 0.4 1115 132 12
Australia 2003 0 0 1 14,567 4.1 11161 3003 403
Austria 2016 0 1 1 2,515 0.7 2147 328 40
Belgium 2009 0 1 1 3,878 1.1 3424 409 45
Canada 2004 1 0 1 21,954 6.2 16017 4569 1,368
Chile 2015 0 1 0 5,721 1.6 5013 594 114
China 2008 1 0 1 47,175 13.3 38048 8391 736
Denmark 2016 1 1 0 2,984 0.8 2449 445 90
Finland 2016 1 1 0 5,561 1.6 4590 716 255
France 2001 1 1 1 30,362 8.5 25530 3981 851
Germany 2016 1 1 0 25,323 7.1 20939 3817 567
Greece 2006 1 1 1 3,235 0.9 2652 519 64
Hong Kong 2015 1 0 0 11,283 3.2 9465 1522 296
Hungary 2016 1 1 0 122 0.0 95 24 3
India 2015 1 1 1 26,917 7.6 25592 860 465
Indonesia 2012 0 1 1 13,653 3.8 11981 1570 102
Ireland 2016 1 1 0 4,003 1.1 2984 772 247
Italy 2016 1 1 0 10,625 3.0 8086 1973 566
Malaysia 2007 0 0 0 5,546 1.6 5101 394 51
Netherlands 2016 0 1 0 9,144 2.6 6488 1635 1,021
Norway 2013 0 1 1 4,487 1.3 3798 466 223
Pakistan 2009 1 1 1 1,171 0.3 1111 27 33
Peru 2015 1 1 1 982 0.3 889 80 13
Philippines 2011 1 1 1 2,411 0.7 1983 394 34
Poland 2016 1 1 1 3,630 1.0 3132 430 68
Portugal 2010 0 1 1 479 0.1 337 139 3
Romania 2016 1 1 0 965 0.3 774 172 19
Singapore 2016 0 0 0 8,289 2.3 7089 924 276
Slovenia 2017 1 1 0 107 0.0 58 47 2
South Africa 2010 1 0 0 3,828 1.1 3027 684 117
Spain 2012 0 1 0 5,530 1.6 4799 584 147
Sweden 2016 1 1 0 14,223 4.0 12278 1771 174
Taiwan (China) 2019 1 0 1 12,764 3.6 11536 1012 216
Turkey 2014 0 1 1 3,900 1.1 3198 600 102
UK 2013 0 1 1 47,140 13.3 33330 11849 1,961

35
 Table 1. (continued)

Panel B. Control countries

Country/Region Mand. All-at- Issued No # Supply- % # Public # Private # Other
ESG once by comply- chain- suppliers suppliers suppliers
disc. disc.? govern or- relations
year inst.? explain
disc.?
Bahrain - - - - 260 0.1 197 60 3
Brazil - - - - 6,358 1.4 5288 900 170
Bulgaria - - - - 149 0.0 99 45 5
Colombia - - - - 355 0.1 235 112 8
Cyprus - - - - 425 0.1 330 39 56
Egypt - - - - 626 0.1 576 42 8
Israel - - - - 9,937 2.2 7593 1979 365
Japan - - - - 57,766 12.8 53158 4260 348
Jordan - - - - 185 0.0 163 16 6
Kazakhstan - - - - 170 0.0 157 9 4
Kenya - - - - 211 0.1 193 17 1
Malta - - - - 138 0.0 123 12 3
Mauritius - - - - 182 0.0 103 77 2
Mexico - - - - 5,361 1.2 4609 672 80
Morocco - - - - 108 0.0 86 16 6
New Zealand - - - - 1,532 0.3 1232 187 113
Nigeria - - - - 354 0.1 287 62 5
Oman - - - - 762 0.2 658 74 30
Qatar - - - - 672 0.2 341 312 19
Russian Fed. - - - - 4,707 1.0 3856 783 68
Saudi Arabia - - - - 1,756 0.4 1170 524 62
South Korea - - - - 26,357 5.8 24467 1574 316
Switzerland - - - - 10,923 2.4 8803 1689 431
Thailand - - - - 5,896 1.3 5454 361 81
Tunisia - - - - 17 0.0 13 3 1
Ukraine - - - - 183 0.0 128 50 5
U. Arab Emirat. - - - - 1,275 0.3 717 507 51
United States - - - - 314,092 69.6 200457 81757 31878
Vietnam - - - - 810 0.2 714 89 7
Notes: Selection of treated and control countries follows Krüger et al. (2023).

36
 Table 2. Summary statistics
Treatment countries Control countries
(N=355,733) (N=451,567)
Public suppliers (1/0) 0.82 0 1 0.71 0 1
Private suppliers (1/0) 0.15 0 1 0.21 0 1
Other suppliers (1/0) 0.01 0 1 0.01 0 1
Duration (in days) 572 0 6386 620 0 6351
Within same industry 0.07 0 1 0.07 0 1
Within same country 0.26 0 1 0.51 0 1
Supplier discloses link 0.79 0 1 0.74 0 1
Important supplier 0.25 0 1 0.26 0 1
HHI (supplier ind.) 0.52 0 1 0.23 0 1
HHI (customer ind.) 0.38 0 1 0.32 0 1
Notes: All variables are defined in Appendix A.

37
 Table 3. Mandatory ESG reporting and changes in market share

Panel A. Market share of public suppliers

Dependent variable: Contract with public supplier (1/0)
Model 1 Model 2 Model 3 Model 4
Treated -0.043** -0.040** -0.043** -0.041**
(-2.34) (-2.27) (-2.38) (-2.28)
Duration 0.000**
(2.13)
Within same industry -0.010*
(-1.72)
Within same country -0.025***
(-4.93)
Supplier discloses link 0.121***
(4.16)
HHI (supplier industry) 0.074***
(5.32)
HHI (customer industry) -0.018***
(-4.18)
Year fixed effects Included None None None
Supplier Country fixed effects Included Included Included Included
Customer Country fixed effects None Included None None
Supplier Ind-by-Year fe None Included Included Included
Customer Ind-by-Year fe None Included Included Included
Customer fixed effects None None Included Included
Adj. R2 0.137 0.207 0.254 0.263
N 807300 663668 635351 635351
Panel B. Market share of private suppliers
Dependent variable: Contract with private supplier (1/0)
Model 1 Model 2 Model 3 Model 4
Treated 0.031*** 0.030*** 0.035*** 0.033***
(3.22) (2.86) (3.07) (2.90)
Duration 0.000
(0.49)
Within same industry 0.015***
(2.66)
Within same country 0.023***
(5.64)
Supplier discloses link -0.111***
(-3.70)
HHI (supplier ind.) -0.056***
(-4.60)
HHI (customer ind.) 0.021***
(4.16)
Year fixed effects Included None None None
Supplier Country fixed effects Included Included Included Included
Customer Country fixed effects None Included None None
Supplier Ind-by-Year fe None Included Included Included
Customer Ind-by-Year fe None Included Included Included
Customer fixed effects None None Included Included
Adj. R2 0.069 0.124 0.174 0.182
N 807300 663668 635351 635351
Notes: The unit of observation is supply-chain (contracting) relation. All variables are defined in Appendix A.
***, **, * indicate statistical significance at the 1%, 5%, and 10% level, respectively, using two-tailed tests and
standard errors clustered at the country level.

38
 Table 4. Even regulation setting: Sweden

Panel A. Sweden (treated) vs. control countries

Dependent variable: Public supplier (1/0) Private supplier (1/0)
Model 1 Model 2 Model 3 Model 4
Treated 0.016 -0.023 -0.056 -0.015
(0.25) (-0.61) (-0.89) (-0.47)
Controls None Included None Included
Year fixed effects Included None Included None
Supplier Country fixed effects Included Included Included Included
Customer Country fixed effects None None None None
Supplier Ind-by-Year fe None Included None Included
Customer Ind-by-Year fe None Included None Included
Customer fixed effects None Included None Included
Adj. R2 0.070 0.218 0.047 0.174
N 324716 248701 324716 248701
Panel B. Norway (treated) vs. control countries
Dependent variable: Public supplier (1/0) Private supplier (1/0)
Model 1 Model 2 Model 3 Model 4
Treated -0.179*** -0.188*** 0.104* 0.132**
(-2.85) (-3.04) (1.99) (2.17)
Controls None Included None Included
Year fixed effects Included None Included None
Supplier Country fixed effects Included Included Included Included
Customer Country fixed effects None None None None
Supplier Ind-by-Year fe None Included None Included
Customer Ind-by-Year fe None Included None Included
Customer fixed effects None Included None Included
Adj. R2 0.073 0.193 0.046 0.154
N 233210 186035 233210 186035
Notes: The unit of observation is the supply-chain (contracting) relation. Given the 2*2 DiD structure in both
panels, we restrict the respective samples to 3 pre-years and 5 post-years. Panel A shows results for Sweden versus
control countries, and Panel B shows results for Norway versus control countries. Norway is a neighboring country
to Sweden with similar institutional characteristics, but other than in Sweden, the Norwegian ESG disclosure
mandate applies to public firms only. All variables are defined in Appendix A. ***, **, * indicate statistical
significance at the 1%, 5%, and 10% level, respectively, using two-tailed tests and standard errors clustered at the
industry level.

39
 Table 5. Are contracts shifted from public to private suppliers?

Panel A. Market share of other (non-public and non-private) suppliers

Dependent variable: Contract with other supplier (1/0)
Model 1 Model 2 Model 3 Model 4
Treated -0.001 0.000 0.000 0.000
(-0.65) (0.00) (0.57) (0.53)
Controls None None None Included
Year fixed effects Included None None None
Supplier Country fixed effects Included Included Included Included
Customer Country fixed effects None Included None None
Supplier Ind-by-Year fe None Included Included Included
Customer Ind-by-Year fe None Included Included Included
Customer fixed effects None None Included Included
Adj. R2 0.003 0.636 0.691 0.693
N 807300 663668 635351 635351

Panel B. Variation in availability of private suppliers

Dependent variable: Contract with Contract with
public supplier (1/0) private supplier (1/0)
Conditional variable: High pre-treatment proportion of private suppliers (per country-SIC)

High_Availability = industry proportion of private suppliers above mean

Low_Availability = industry proportion of private suppliers below mean
Model 1 Model 2
Treated×High_Availability -0.226*** 0.218***
(-8.00) (10.03)
Treated×Low_Availability 0.032 -0.045***
(1.33) (-2.69)
F-test for differences: p-value 0.000 0.000
Year fixed effects Included Included
Supplier Country fixed effects Included Included
Adj. R2 0.152 0.087
N 807300 807300

Notes: The unit of observation is supply-chain (contracting) relation. Each regression model in panel A includes
a dummy variable controlling for treated contracts in country-SIC groups that lack country-SIC observations in
the pre-period. Contracts with other supplier (1/0) include contracts of NGOs, Governments, and Universities.
All variables are defined in Appendix A. ***, **, * indicate statistical significance at the 1%, 5%, and 10%
level, respectively, using two-tailed tests and standard errors clustered at the country level.

40
 Table 6. Economic mechanisms

Panel A. Customer preferences for ESG opaqueness

Dependent variables: Contract with Contract with
public supplier (1/0) private supplier (1/0)
Conditional variable: High pre-treatment proportion of listed customers located in countries
with ESG reporting (per country-SIC)
High_ESG_Exposure = above mean listed, regulated customers
Low_ESG_Exposure = below mean listed, regulated customers
Model 1 Model 2
Treated× High_ESG_Exposure -0.072*** 0.055***
(-3.30) (3.91)
Treated× Low_ESG_Exposure -0.016 0.009
(-0.84) (0.77)
F-test for differences: p-value 0.000 0.003
Year fixed effects Included Included
Supplier Country fixed effects Included Included
Adj. R2 0.138 0.069
N 807300 807300
Panel B. Industry competition among suppliers
Dependent variables: Contract with Contract with
public supplier (1/0) private supplier (1/0)
Conditional variable: High pre-treatment industry competition among suppliers measured as
HHI (per country-SIC)
High_Competition = HHI below mean
Low_Competition = HHI above mean
Model 1 Model 2
Treated×High_Competition -0.064*** 0.053***
(-3.25) (3.70)
Treated×Low_Competition -0.024 0.012
(-1.20) (1.07)
F-test for differences: p-value 0.003 0.005
Year fixed effects Included Included
Supplier Country fixed effects Included Included
Adj. R2 0.138 0.069
N 807300 807300
Panel C. Economic importance of supplier
Dependent variables: Contract with Contract with
public supplier (1/0) private supplier (1/0)
Conditional variables: High pre-treatment proportion of Economically important suppliers (per
country-SIC)
High_Importance = important suppliers above mean
Low_Importance = important suppliers below mean
Model 1 Model 2
Treated×High_Importance -0.017 0.010
(-0.89) (0.93)
Treated×Low_Importance -0.067*** 0.051***
(-2.76) (3.08)
F-test for differences: p-value 0.026 0.027
Year fixed effects Included Included
Supplier Country fixed effects Included Included
Adj. R2 0.138 0.069
N 807300 807300
Notes: The unit of observation is supply-chain (contracting) relation. Each regression model includes a dummy
variable controlling for treated contracts in country-SIC groups that lack country-SIC observations in the pre-

41
period. All variables are defined in Appendix A. ***, **, * indicate statistical significance at the 1%, 5%, and
10% level, respectively, using two-tailed tests and standard errors clustered at the country level.

42
 Appendix A. Variable definitions
Variable Description Data source
Treated Indicator variable that equals 1 for all supply-chain Krüger et al. (2023),
relations (contracts) with suppliers in treated countries, Sticks & Carrots
i.e., countries that adopted an ESG reporting mandate, in project
the post period, and 0 otherwise.
Public suppliers (1/0) Indicator variable that equals 1 if the supplier in the FactSet Reverse
supply-chain (contracting) relation is public
(“supplier_entity_type” = “PUB”), and zero otherwise.
Private suppliers (1/0) Indicator variable that equals 1 if the supplier in the FactSet Reverse
supply-chain (contracting) relation is private
(“supplier_entity_type” = “HOL” and “PVT” and
“SUB”) and zero otherwise.
Other suppliers (1/0) Indicator variable that equals 1 if the supplier in the FactSet Reverse
supply-chain (contracting) relation is Government
(“supplier_entity_type” = “GOV”), University
(“supplier_entity_type” = “COL”), or NPO
(“supplier_entity_type” = “NPO”), and zero otherwise.
Duration (in days) Duration of the supply-chain relation (contract) in days. FactSet Reverse
Duration is calculated based on FactSet’s “start_date”
and “end_date” variables.
Within same industry Indicator variable that equals 1 if the supplier and the FactSet Reverse
customer in the supply-chain relation (contracts) are both
in the same industry (same primary SIC code), and zero
otherwise. Primary SIC industry is identified by
FactSet’s “supplier_primary_sic_code” and
“customer_prima-ry_sic_code” variables.
Within same country Indicator variable that equals 1 if the supplier and the FactSet Reverse
customer in the supply-chain relation (contracts) are both
from the same country, and zero otherwise. Country is
identified by FactSet’s “customer_iso_country” and
“supplier_iso_country” variables.
Supplier discloses link Indicator variable that equals 1 if the supplier in the FactSet Reverse
supply-chain relation (contracts) discloses the relation,
and zero otherwise. Disclosure is identified by FactSet’s
“source_factset_entity_id” variable.
HHI (supplier industry) Supplier’s industry competition is identified via FactSet Reverse
Herfindahl-Hirschman Index (HHI). HHI is based on
primary SIC industry groups-country-years and includes
the number of the suppliers’ contracts relative to the
overall number of contracts per industry-country-year.
HHI (customer industry) Customer’s industry competition is identified via FactSet Reverse
Herfindahl-Hirschman Index (HHI). HHI is based on
primary SIC industry groups-country-years and includes
the number of the customers’ contracts relative to the
overall number of contracts per industry-country-year.
Economic importance of Sum of the following three sub-measures: Average pre- FactSet Reverse
supplier treatment number of contracts per industry-country with (definition in the
(i) supply-chain link is disclosed by customer, (ii) more spirit of Darendeli et
industry competition among customers than suppliers, al., 2022)
and (iii) supplier is important for customer based on
FactSet Ranking.

43
 Online Appendix

For
Economics effects of uneven regulation: Mandatory ESG reporting and competitive
positions of public and private firms

Figure A1. Time trends FactSet Revere coverage

Table A1. Stacked DiD estimator
Table A2. Bundled ESG reporting mandates
Table A3. Alternative clustering
Table A4. Relation between supplier’s supply-chain contracting and revenues

44
 Figure A1. Time trends in FactSet Revere coverage
Figure A1a. International sample (unscaled) Figure A1b. International sample (scaled)

Figure A1c. US only sample (unscaled) Figure A1d. US only sample (scaled)

45
 Table A1. Stacked DiD estimator
Panel A. Changes in contracting with public suppliers
Dependent variable: Public supplier (1/0)
Stacked sample with all pre/post Stacked sample with max. 6
years pre/post years
Model 1 Model 2 Model 3 Model 4
Treated -0.045*** -0.040*** -0.042*** -0.039***
(-2.72) (-2.64) (-2.70) (-2.95)
Controls None Included None Included
Year fixed effects Included Included Included Included
Supplier Country fixed effects Included Included Included Included
Customer Country fixed effects None Included None Included
Supplier Industry fixed effects None Included None Included
Customer Industry fixed effects None Included None Included
Adj. R2 0.144 0.261 0.130 0.249
N 7462233 6033841 4709184 3808192
Panel B. Changes in contracting with private suppliers
Dependent variable: Private supplier (1/0)
Stacked sample with all pre/post Stacked sample with max. 6
years pre/post years
Model 1 Model 2 Model 3 Model 4
Treated 0.030*** 0.030*** 0.030*** 0.031***
(2.72) (2.68) (2.70) (3.03)
Controls None Included None Included
Year fixed effects Included Included Included Included
Supplier Country fixed effects Included Included Included Included
Customer Country fixed effects None Included None Included
Supplier Industry fixed effects None Included None Included
Customer Industry fixed effects None Included None Included
Adj. R2 0.068 0.171 0.065 0.171
N 7462233 6033841 4709184 3808192
Notes: The unit of observation is supply-chain (contracting) relation. All variables are defined in Appendix A.
***, **, * indicate statistical significance at the 1%, 5%, and 10% level, respectively, using two-tailed tests and
standard errors clustered at the country level. Fixed effects and cluster-level are saturated to fit the stacked
sample structure.

46
 Table A2. Bundled ESG reporting mandates
Dependent variable: Public supplier (1/0) Private supplier (1/0)
Model 1 Model 2 Model 3 Model 4
Treated -0.042 -0.042* 0.031** 0.036**
(-1.67) (-1.74) (2.20) (2.41)
Controls None Included None Included
Year fixed effects Included None Included None
Supplier Country fixed effects Included Included Included Included
Customer Country fixed effects None None None None
Supplier Ind-by-Year fe None Included None Included
Customer Ind-by-Year fe None None None None
Supplier fixed effects None Included None Included
Adj. R2 0.147 0.272 0.072 0.184
N 682451 539921 682451 539921
Notes: The unit of observation is supply-chain (contracting) relation. All variables are defined in Appendix A.
Treated countries in the NFRD tests include all bundled ESG reporting mandates in 2016 (see Table 1). Given the
non-staggered DiD structure in the NFRD tests, we restrict our sample to 3 pre-years and 5 post-years. ***, **, *
indicate statistical significance at the 1%, 5%, and 10% level, respectively, using two-tailed tests and standard
errors clustered at the country level.

47
 Table A3. Alternative clustering

Panel A. Public supplier

Dependent variable: Public supplier (1/0)
Cluster-level
- 2-digit Sic 2-digit Sic Customer
(supplier) (customer)
Model 1 Model 2 Model 3 Model 4
Treated -0.043*** -0.043*** -0.043*** -0.043***
(-19.24) (-2.85) (-5.95) (-13.47)
Year fe Included Included Included Included
Supplier Country fe Included Included Included Included
Adj. R2 0.137 0.137 0.137 0.137
N 807300 807300 807300 807300
Panel B. Private supplier
Dependent variable: Private supplier (1/0)
Cluster-level
- 2-digit Sic 2-digit Sic Customer
(supplier) (customer)
Model 1 Model 2 Model 3 Model 4
Treated 0.031*** 0.031*** 0.031*** 0.031***
(15.02) (2.70) (5.43) (10.82)
Year fe Included Included Included Included
Supplier Country fe Included Included Included Included
Adj. R2 0.069 0.069 0.069 0.069
N 807300 807300 807300 807300
Notes: The unit of observation is supply-chain (contracting) relation. All variables are defined in Appendix A. We
note the trade-off between selecting a few large groups for clustering (e.g., at the industry level or country-level)
to accommodate more appropriately the various dependences in the data versus selecting a cluster level with a
modest number of groups that more likely meet the homogeneity restriction, such as clustering by firm (Conley
et al., 2018). ***, **, * indicate statistical significance at the 1%, 5%, and 10% level, respectively, using two-
tailed tests.

48
 Table A4. Relation between supplier’s supply-chain contracting and revenues

Panel A. Summary statistics

Variables N Mean P50 Min Max
Log_Sales 20946 13.40 14 3 19
Number of new contracts 20946 8.46 4 1 66
Average duration of new contracts 20946 465.74 397 0 1471
Net contracting 20946 -0.17 0 -39 39
Panel B. Correlations
Variables 1 2 3 4
1 Log_Sales 1.00
2 Number of new contracts 0.22*** 1.00
3 Average duration of new contracts 0.09*** 0.04*** 1.00
4 Net contracting 0.05*** 0.34*** -0.07*** 1.00
Panel C. Regression analysis for new contracts
Dependent variable: Log_Sales Log_Sales Log_Sales Log_Sales
Model 1 Model 2 Model 3 Model 4
N of new contracts 0.0530*** 0.0522*** 0.0561*** 0.0019***
(20.34) (20.18) (21.62) (3.99)
Average contract duration 0.0009*** 0.0007*** 0.0001**
(10.38) (9.20) (2.07)
Year fixed effects None None Included Included
Industry fixed effects None None Included None
Firm fixed effects None None None Included
Adj. R2 0.0474 0.0543 0.2828 0.9566
N 20946 20946 20946 20946
Panel D. Regression analysis for net contracts
Dependent variable: Log_Sales Log_Sales Log_Sales Log_Sales
Model 1 Model 2 Model 3 Model 4
Net contracting 0.0139*** 0.0158*** 0.0114*** 0.0007
(6.13) (6.92) (5.37) (1.60)
Average contract duration 0.0010*** 0.0010*** 0.0001**
(11.59) (11.42) (2.20)
Year fixed effects None None Included Included
Industry fixed effects None None Included None
Firm fixed effects None None None Included
Adj. R2 0.0022 0.0111 0.2351 0.9566
N 20946 20946 20946 20946
Notes: Sample includes all US firms between the years 2012 and 2018, for which contract and sales information
is available in FactSet Revere and Worldscope Refinitiv. All variables are winsorized at a 1% level. Results
remain unchanged when we do not winsorize the variables. Contracting variables are averaged across supplier-
year. Net contracting is defined as the difference between the number of new contracts of supplier i in t0 and the
number of terminated contracts of supplier i in t0. In Panels C and D, ***, **, * indicate statistical significance
at the 1%, 5%, and 10% level, respectively, using two-tailed tests and standard errors clustered at the firm level.

49