Compliance without Commitment? Mandatory ESG Reporting on the Mongolian Stock Exchange

Abstract

Stock exchanges in frontier markets increasingly require listed companies to publish environmental, social and governance (ESG) reports, yet little is known about whether such rules change how many firms report, when they report and what they file. This study evaluates the rule of the Mongolian Stock Exchange that, from October 2024, made annual ESG reporting mandatory for issuers in its top listing tier (Tier I) and left it voluntary in Tiers II and III. Using only public exchange records, we reconstruct each issuer's tier at every reporting deadline from the exchange's tier notices and date all 99 documents in its ESG registry, which yields 668 firm-years for 176 listed equities over the financial years 2022–2025. Difference-in-differences estimates with firm and year fixed effects, bias-reduced cluster-robust and wild cluster bootstrap inference show that the mandate raised the probability that a Tier I issuer posted an ESG report within five months of the deadline by 46 percentage points and the probability of posting by the 30 April deadline by 25 points. Tier I reporting was already rising before the rule, but among issuers that had never reported, the annual rate of starting rose from 26% to 78% in Tier I and from 1% to 3% elsewhere. Reporting followed the obligation rather than a commitment: two issuers moved out of Tier I in September 2025 stopped reporting, two moved into it started, and after the rule non-mandated issuers followed a report with another in only 5 of 11 cases, against 32 of 33 cases among mandated issuers. Compliance was partial and thin. Only 53% of mandated firm-years met the deadline, first reports produced under the mandate were shorter than those of earlier reporters (median 7 against 10 pages) and less often on time, about half of the posted documents are scanned images without machine-readable text, and six are in English. A tier-based mandate closed most of the reporting gap within two years, but exchanges need enforced deadlines and data standards to turn filings into information investors can use.