Scholars have explored the ways in which multinational enterprises (MNEs) react to host-country stakeholders amid the political tension between the host country and home country. However, scant attention has been paid to understanding how MNEs respond to home-country stakeholders in the context of political tension. Our study formulates a theoretical framework to investigate the impact of political tension on MNEs’ decisions about disclosing their host-country ESG activities. Our analysis reveals that an MNE is less likely to disclose host-country ESG activities in its home-country ESG report when political tension between its home country and host country is stronger. We further find that this negative relationship is more pronounced for MNEs with higher domestic political connections, larger domestic marketing dependence, and located in cities with a colonial legacy. These findings raise important ethical considerations about transparency in multinational contexts and offer a new perspective to interpret MNEs’ ESG disclosure decisions.
Xiang et al. (Fri,) studied this question.