Navigating the Disclosure Dilemma: The Trade-off Between Legitimacy and Market Clarity in the Energy Sector

Purpose – The purpose of this study is to investigate the heterogeneous valuation effects of adopting global investor-focused ESG standards (e.g., GRI, SASB) versus local stakeholder-centric mandates (e.g., EU CSRD, China CSDS). Specifically, it aims to resolve the strategic trade-off MNEs face between pursuing "global standardization" for capital access and "local alignment" for operational legitimacy in a bifurcated regulatory landscape.Design/methodology/approach – Spanning the critical transition period from 2016 to 2023, this study employs a longitudinal research design utilizing a unique dataset of multinational energy enterprises (MNEs) operating in both the European Union and China. The authors applied a fixed-effects panel regression strategy to isolate long-term performance trends and complemented this with an event study methodology to capture market reactions to the regulatory shocks of 2024. Robustness checks, including winsorization and lagged variable models, were employed to ensure validity.Findings – The empirical results reveal three distinct mechanisms: (1) Signal Dilution: Voluntary adoption of global standards yields statistically insignificant financial returns, suggesting they have become baseline "hygiene factors"; (2) Legitimacy Premium: Strict alignment with local mandates—particularly the EU’s CSRD—generates tangible improvements in Return on Equity (ROE) and positive market reactions in China; and (3) Complexity Penalty: A non-linear, inverted U-shaped relationship exists between disclosure intensity and Tobin’s Q, indicating that adopting multiple conflicting standards triggers information overload and discounts firm value.Originality/value – This study contributes to the literature by integrating Signaling and Legitimacy theories into a unified "Regulatory Portfolio" framework. It is among the first to quantitatively identify the "Complexity Penalty" in ESG reporting and proposes the concept of "Strategic Interoperability"—integrating divergent data streams rather than maximizing disclosure volume—as a superior pathway for value creation. The findings offer actionable insights for managers navigating the shift from voluntary to mandatory regimes.