Environmental policy orientation and corporate green transformation: A study based on information disclosure perspective

Zhihe Zhang, Zaishui Yu, Chengyu Yao and Zerui Zhang

Finance Research Letters, 2025, vol. 83, issue C

Abstract: This research leverages China's 2018 Environmental Protection Tax Law enactment as a policy shock, applying a DID methodology to Chinese A-share listed firms' data to assess how environmental policy signals and disclosure practices drive sustainable corporate transitions. The results demonstrate that policy signals and disclosure requirements collectively accelerate firms' adoption of sustainable practices through enhanced regulatory pressures and transparency mechanisms. Notably, this promotional effect exhibits heterogeneity contingent upon variations in firms' environmental governance capabilities and ownership characteristics. Mechanism tests further demonstrate that climate risk and political embeddedness serve as crucial transmission channels.

Keywords: Environmental policy orientation; Information disclosure; Corporate green transformation; Climatic risk; Political embeddedness (search for similar items in EconPapers)
JEL-codes: C23 K32 M14 Q58 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:83:y:2025:i:c:s154461232500981x

DOI: 10.1016/j.frl.2025.107723

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