Corporate financing constraints and environmental information disclosure hype

Zhihui Yuan and Xianjun Bao

International Review of Economics & Finance, 2025, vol. 102, issue C

Abstract: Corporate environmental disclosure has emerged as a pivotal factor in augmenting corporate value and securing essential resources. However, firms confronted with financing constraints may resort to environmental disclosure hype, potentially misleading investors. This study examines the relationship between corporate financing constraints and environmental disclosure hype through the theoretical lens of information manipulation and effective supervision. Utilizing a sample of China's A-share listed firms from 2012 to 2020, we employ dependency syntax analysis to categorize predictive and substantive environmental information disclosed in annual reports. We construct a measure of environmental disclosure hype by integrating substantive green technology innovation with predictive environmental information disclosure. Our empirical findings demonstrate a significant positive association between financing constraints and environmental disclosure hype. This relationship is moderated by the implementation of the Environmental Protection Tax Law, the characteristics of heavy polluting firms, and corporate carbon emission performance. Further analysis identifies two key mechanisms: management's self-interest motivations and diminished oversight from institutional investors. These findings offer substantial implications for strengthening corporate governance and improving transparency in the information environment. We develop a novel Dual Information Barrier framework that reveals how financially constrained firms strategically combine complex syntactic structures with low-quality technical disclosures to create misleading environmental narratives, advancing beyond conventional greenwashing paradigms. We establish financing constraints as a critical driver of environmental disclosure hype, demonstrating how resource scarcity induces firms to adopt this dual-barrier strategy. These findings provide important insights for regulators seeking to improve disclosure quality in emerging markets.

Keywords: Corporate financing constraint; Environmental information disclosure hype; Self-interest motivation; External supervision (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1059056025004472
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:102:y:2025:i:c:s1059056025004472

DOI: 10.1016/j.iref.2025.104284

Access Statistics for this article

International Review of Economics & Finance is currently edited by H. Beladi and C. Chen

More articles in International Review of Economics & Finance from Elsevier
Bibliographic data for series maintained by Catherine Liu ().