Law and governance in environmental oversight: The role of environmental courts in enhancing corporate information transparency

Zilong Liu, Rungen Chen, Yu Chen, Qian Ye and Kanglan Fang

Finance Research Letters, 2025, vol. 80, issue C

Abstract: This study uses China's environmental courts as a quasi-natural experiment to examine their effect on corporate information transparency. Results indicate that environmental courts significantly improve corporate information transparency by strengthening judicial constraints, raising noncompliance costs, and improving external oversight. These effects are stronger for younger firms, private enterprises, and those in regions with less-developed markets. Corporate visibility, measured by analyst coverage and short-term institutional holdings, reinforces these benefits by aligning oversight with market incentives. These findings underscore the role of judicial specialization in promoting transparency and offer practical insights to improve environmental legal systems and corporate disclosure practices.

Keywords: Environmental courts; Corporate information transparency; Judicial specialization; Rule of law; External oversight (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:80:y:2025:i:c:s1544612325006257

DOI: 10.1016/j.frl.2025.107364

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