Does LG G5 support USB OTG cable or not?

Yes, LG G5 supports OTG. You can connect your external storage devices to your mobile through the OTG functionality offered by this smartphone. You can access the files in your external storage devices and even transfer data from your smartphone to external storage devices.
It is clearly mentioned in the specifications mentioned by LG in their official site.

Well, being a high end device LG G5 does support USB OTG functionality. You can connect your external drives to your LG G5 and view the files stored on them.
Please note that you will not get the OTG cable with your phone. You will need to purchase it as a separate accessory. Also make sure that the file format on your drive is supported on your phone. If not, you need to format the drive to a compatible format. However, ensure that you have backed up the data on the external drive before formatting.

Yes of course, along with other USB options like a 3.0 version of USB port, a Type-C 1.0 reversible connector, it has an USB option for the On-The-Go option.
So you are going to get all the options for the OTG USB connectivity. As the phone supports almost all the major file formats, there won't be much issues with it. But is would be always advisable to check out the file types that are supported by the phone before you get other files from any external drives. In case you face some mismatch, you need to convert the file to a supported one to be on the safe side.
A backup of your files is always a good habit before you go for a file transferring task.

LG G5 has the USB 3.0 support and the device has OTG support. So you can easily use the device for the connectivity for file transfer as well as charging the device. Do note that the connector here is Type-C 1.0 reversible connector. So unlike MicroUSB, you can find the connector with 24 pin end on both side. This is very good for faster charging the device. The data transfer rate for this cable is higher too. However you have to buy the connector separately as it doesn't include in the device packaging.

You can read the specifications and the support for USB OTG cable. http://www.gsmarena.com/lg_g5-7815.php