Does environmental labeling exacerbate heavily polluting firms’ financial constraints? Evidence from China

Han, Xiao; Wang, Kemin

doi:10.1016/j.cjar.2020.05.001

Cited by 18 publications

(5 citation statements)

References 52 publications

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“…That is, the investors are not able to assess the valuation effect of financial constraints. Thus, financial constraints are an essential element for financing and investment decisions of firms (Xiao and Wang 2020). Hong et al (2012) indicate that firms with good performance in ESG will face lower financial constraints.…”

Section: Moderating Effect Of Financial Constraints In Environmental mentioning

confidence: 99%

The Impact of Environmental Sustainability Disclosure on Stock Return of Saudi Listed Firms: The Moderating Role of Financial Constraints

Alsahlawi

Chebbi

Ammer

2021

IJFS

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Environmental sustainability represents nowadays a significant factor for business sector. Firms carry out many initiatives to develop environmental practices. Investors increasingly consider environmental discloser by firms and integrate this disclosure into the investment decision-making process. Using a database of Saudi listed firms, this study adds to the literature by examining the relationship between the environmental sustainability disclosure and stock return and whether this relationship is moderated by the financial constraints. We find that the environmental sustainability disclosure has significant and negative impact on stock return, indicating that investors do not consider environmental disclosure when valuing the stocks. Furthermore, our results propose that the negative impact of environmental disclosure on stock return is more evident in firms with financial constraints. This study provides managerial implications for regulatory authorities, firms and investors. The environmental practices can be value relevant. However, these practices need to be efficiently integrated into stock valuation.

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Section: Moderating Effect Of Financial Constraints In Environmental mentioning

confidence: 99%

The Impact of Environmental Sustainability Disclosure on Stock Return of Saudi Listed Firms: The Moderating Role of Financial Constraints

Alsahlawi

Chebbi

Ammer

2021

IJFS

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“…Pollutionintensive enterprises face higher adjustment costs and greater uncertainty in industrial upgrading when transitioning to green production (Zhang, 2023b). Additionally, external financing for heavily polluting industries is subject to stringent regulations, and pollution-intensive enterprises may even suffer from "credit discrimination" as a result (Xiao & Wang, 2020). Therefore, when CPU increases, the incentive for enterprises in heavily polluting industries to undergo green transformation significantly decreases, making them more likely to exploit the growth of CPU to engage in greenwashing activities.…”

Section: Hypothesis Developmentmentioning

confidence: 99%

Fishing in muddy water? Climate policy uncertainty and corporate greenwashing in environmental, social, and governance

Zhang,

2024

Manage Decis Econ

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This study investigates the relationship between climate policy uncertainty and corporate greenwashing behavior using data from Chinese A‐share listed companies from 2009 to 2021. The results indicate that the increasing climate policy uncertainty significantly and robustly strengthens corporate greenwashing behavior, particularly among firms located in regions with weaker environmental regulations, within high‐polluting industries and with shorter‐term management perspectives. Additionally, the development and widespread adoption of digital technologies, along with enhanced external regulatory pressures, can inversely moderate the positive relationship between climate policy uncertainty and corporate greenwashing. In summary, this study contributes to our understanding of corporate behavior under climate risks and provides insights for achieving social sustainability.

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“…As the famous Porter hypothesis postulates, environmental regulations can directly or indirectly reduce pollution emission [39]. Given the constraints of environmental credit, the government sector uses polluters' credit records as an important basis for determining the frequency at which they supervise environmental protection [40], implement refined enterprise management, strengthen the environmental supervision of highly polluting enterprises, and incorporate enterprises' environmental pollution behavior into the national credit management information system to allocate economic resources and support policies accordingly. Environmental credit constraints affect enterprises' environmental governance input, product R&D, and environmental strategic decisions, etc.…”

Section: Theoretical Hypothesismentioning

confidence: 99%

Environmental Credit Constraints and the Enterprise Choice of Environmental Protection Behavior

Yan,

Xiang,

et al. 2023

Sustainability

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Choosing appropriate environmental protection strategies is important in improving enterprises’ economic and environmental performance. Based on the data of A-share listed enterprises from 2009 to 2019 in China, this paper uses the difference-in-differences model to identify the effects of environmental credit constraints on the enterprise choice of environmental protection behavior. We find that environmental credit constraints motivate some enterprises to choose active environmental behavior due to the incentive effect of environmental credit constraints on R&D investments. However, some enterprises may adopt evasive strategies because environmental credit constraints increase production costs and debt. State-owned enterprises prefer active environmental protection strategies to address environmental credit constraints, while private enterprises mainly adopt evasive strategies. Environmental credit constraints make high-interest and high-profitability enterprises choose active environmental strategies. Environmental credit constraints generated by enterprises’ evasive environmental behavior increase the probability of litigation and arbitration cases, and environmental credit system construction in the short term may exacerbate unemployment, which the government needs to pay attention to when developing and implementing a blacklist system for environmental fraud. Although there are limitations in this paper in terms of research objectives and samples, the results are important for improving the environmental management system and the operating performance of enterprises.

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Does environmental labeling exacerbate heavily polluting firms’ financial constraints? Evidence from China

Cited by 18 publications

References 52 publications

The Impact of Environmental Sustainability Disclosure on Stock Return of Saudi Listed Firms: The Moderating Role of Financial Constraints

The Impact of Environmental Sustainability Disclosure on Stock Return of Saudi Listed Firms: The Moderating Role of Financial Constraints

Fishing in muddy water? Climate policy uncertainty and corporate greenwashing in environmental, social, and governance

Environmental Credit Constraints and the Enterprise Choice of Environmental Protection Behavior

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