Does policy uncertainty affect corporate environmental information disclosure: evidence from China

Abstract

Purpose The purpose of this study is to investigate whether and how policy uncertainty affect corporate environmental information disclosure. Design/methodology/approach This study conducts a difference-in-difference estimation and systematically investigates the relationship between policy uncertainty and corporate environmental information disclosure. The baseline regression results are robust to a series of robustness and endogeneity tests. Findings The authors show that firms located in cities with stronger policy uncertainty disclose less information on environmental issues. Furthermore, this negative relationship is stronger in the Midwest and in pre-industrial regions and for stated-owned firms and firms in highly polluting industries. Practical implications This study argues that policy uncertainty reduce the corporate disclosure of environmental information. Therefore, the results provide evidence on how to better emphasize the importance of green gross domestic product in the performance appraisal system for officials. Social implications This study confirms that corporate environmental disclosure is a response to public pressure. The results encourage the government and the public to increase corporate awareness of environmental protection. Originality/value This study contributes to the literature in the following ways. First, the authors provide a new perspective to study the relationship between policy uncertainty and corporate finance. Second, it contributes to the literature on corporate environmental information disclosure by linking policy uncertainty with firms’ disclosure of environmental information. Third, this study is a serious attempt to solve the problem of endogeneity between policy uncertainty and corporate environmental information disclosure.

Trend and relationship between environmental accounting disclosure and environmental performance for mining companies listed in China

“…The trend analysis affirms hypothesis 1, which says mining companies comply with environmental information disclosure in China. The findings from our study are in line with the findings of Artene et al 2020 ; Giannarakis et al 2019 ; and Pan et al 2020 . Artene et al ( 2020 ) using a sample of 65 Romanian listed companies from 2011 to 2013 found that the environmental information disclosure trends have seen a major improvement over the past decade.…”

“…Using existing financial reports to supplement corporate environmental information disclosure is currently the most common way of environmental accounting information disclosure (Lu and Li 2020 ; Pien 2020 ; Tzouvanas et al 2020 ). It increases how supplementary information is disclosed in the company’s annual report (Iatridis 2013 ), listing announcement (Tang et al 2020 ), prospectus (Pan et al 2020 ), and information disclosure in interim reports (Goron 2018 ).…”

How does economic policy uncertainty affect CO2 emissions? A regional analysis in China

“…Furthermore, according to signal theory, the increase of carbon information disclosure can effectively promote energy saving and reduce emission reduction (Connelly et al 2011 ). However, Pan et al ( 2020 ) find that policy uncertainty has a more significant inhibition effect on corporate environmental information disclosure by incorporating difference-in-difference (DID) estimation. Firms have more incentive to reduce the transparency of carbon information disclosure when the EPU is at a high level.…”

How Does Economic Policy Uncertainty Affect CO2 Emissions? A Regional Analysis in China

“…However, firms have more incentive to reduce the transparency of carbon information disclosure when the EPU is at high level. By incorporating differencein-difference (DID) estimation, Pan et al (2020) find that policy uncertainty has a more significant inhibition effect on corporate environmental information disclosure. Beyond question, a reduction in carbon disclosure will increase carbon emissions.…”