Environmental Penalties on Client Firms, Supply Chain Transmission, and Carbon Information Disclosure Catering

Kai Wan, Xiaolin Yu and Tsangyao Chang

Emerging Markets Finance and Trade, 2025, vol. 61, issue 15, 4674-4688

Abstract: Using data from Chinese supply chain enterprises, we find that environmental penalties imposed on customer firms not only reduce their own performance but also prompt suppliers to engage in accommodative carbon disclosure through supply chain transmission. The key mechanisms underlying this distortion effect are the connections between corporate governance layers, the suppliers’ desire to maintain their reputation, and the exacerbation of financing constraints. Further analysis indicates that suppliers are more likely to engage in accommodative behavior when the penalty severity is lower, the customer’s influence is weaker, and media attention is lower.

Date: 2025
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DOI: 10.1080/1540496X.2025.2519420

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