Sustainability signaling in finance: An evolutionary systematic review from dividend signals to ESG value signals
Keywords:
Sustainability signaling, ESG disclosure, Green finance, Information asymmetry, Financial market signalsAbstract
This study conducts an evolutionary systematic review to map how financial signaling has transformed from traditional mechanisms such as dividends, leverage, and disclosure into multidimensional sustainability oriented signals including ESG metrics, green finance instruments, and market-based sustainability indicators. Guided by PRISMA 2020 and structured through the Watase U-AKE framework, the review synthesizes 49 Scopus-indexed studies published between 2015–2025. Bibliometric analyses using VOSviewer reveal five dominant clusters traditional financial signals, disclosure quality, ESG reporting, green finance, and sustainability market metrics indicating a clear conceptual shift toward integrated socio-environmental communication within financial markets. The synthesis identifies multilevel mechanisms shaping signal credibility, including institutional pressures, internal governance capabilities, sustainability-specific infrastructures, and heterogeneous stakeholder interpretation systems. Findings show that sustainability signals exert financial and non-financial effects through complex pathways involving risk perception, information asymmetry reduction, legitimacy enhancement, and market-based valuation processes. However, the review also uncovers persistent fragmentation, methodological inconsistencies, greenwashing risks, and limited theoretical integration across signaling, institutional, legitimacy, and stakeholder perspectives. This study offers a unified integrative framework that connects signal evolution, credibility mechanisms, and outcome pathways, thereby advancing theoretical clarity and providing a foundation for future empirical and policy-oriented research on sustainability signaling in finance.
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