Global Reach of the EU 's CSRD : How Sustainability Disclosure Mandates Affect Non‐ EU Firms

Abstract

ABSTRACT The European Union's Corporate Sustainability Reporting Directive (CSRD) represents a landmark regulatory effort to enhance global sustainability reporting and corporate accountability. This study examines how CSRD affects non‐EU firms with substantial economic exposure to the EU, thereby extending the directive's environmental governance reach beyond Europe's borders. Using a quasi‐experimental design, we analyze market reactions to key CSRD regulatory milestones from 2021 to 2025. We find that firms with higher EU revenue exposure experience significant reductions in their cost of equity, improved liquidity, and expanded analyst coverage following CSRD announcements. These effects scale with the intensity of EU exposure and are mediated through improvements in the information environment, as reflected in analyst coverage and forecast dispersion. Our findings demonstrate how a supranational sustainability disclosure mandate can reshape corporate behavior and financial outcomes internationally. This research contributes to debates on ESG regulation, corporate accountability, and the global diffusion of sustainability governance, with implications for managers, investors, and policymakers navigating emerging ESG disclosure regimes.