Effect of Environmental Penalties on the Cost of Equity – The Role of Corporate Environmental Disclosures

Abstract

Environmental administrative penalty is a powerful way for the government to realize environmental pollution control. When a firm is subjected to an environmental administrative penalty, how the penalty affects its equity cost is a hot issue in academia and industry. Using the ordinary least square method and the Bootstrap method, it is found that environmental penalties significantly increase corporate equity costs in the following year through their disclosure increments; the disclosure increment plays a mediating role in the positive effect. It is also found that the reduced negative information disclosures can increase the effect, while the increased positive information can reduce the effect. These findings help us understand environmental management's significance to a firm's financing sustainability and have practical enlightenment on environmental management and environmental pollution control.

Multi-agent game analysis on standardized discretion of environmental administrative penalty

“…However, it has been confirmed households' behavior would be affected by environmental administrative penalties (Wu et al, 2022). And it will affect firms' costs (Ding & Shahzad, 2022). To assess the SDEAP policy effectiveness, this study improves the model by dynamic stochastic general equilibrium.…”

“…Investors are sensitive to environmental penalties for firms (Wu et al, 2022). It will increase equity costs (Ding & Shahzad, 2022) and audit fees (Xin et al, 2022). That's to say, environmental penalties under SDEAP affect the firms' and households' behavior.…”

How Green Organizational Strategy and Environmental CSR Affect Organizational Sustainable Performance Through Green Technology Innovation Amid COVID-19

“…Irrespective of the many tactics to achieve the objective of GOS, in this setting, it is viewed as actual CSR to stakeholders by including ecological challenges into company culture and commercial decision-making for long-term sustainable goals (Arfara and Samanta, 2020). Increased stakeholder knowledge the ecological emergency has acted as a driver for firms to respond quickly to address stakeholder demands in support of ecological issues (Ding and Shahzad, 2022b;Ding et al, 2022). GOS is commonly regarded as a complementary business strategy (public or private) that serves as a guide for resolving the ecological emergency in the best possible way.…”

“…Despite its importance, no empirical study in the current literature has examined the impact of GOS, ECSR, and GTI on long-term business success . These features are currently being investigated in the prevailing literature in a non-collective manner, and combined research on GOS driving ECSR and GTI to realize OSP is noticeably lacking (Ding and Shahzad, 2022b;Jin et al, 2022;Le, 2022;Wang et al, 2022). Shahzad et al (2020a) investigated the influence of various dimensions of CSR on environmental sustainability and GI in the manufacturing industry.…”

The Impact of Environmental Information Disclosure on Water Quality

“…Experts are more concerned about the influence of tight environmental rules on economic growth as ecological and environmental restrictions become more severe [13]. Substantial restrictions shift a portion of production value from polluting enterprises to polluting enterprises, boosting the upgrading of regional industrial structure [14]. The traditional view is that increasing the intensity of environmental regulation will increase enterprise cost and reduce enterprise productivity.…”