Value-Enhancing Effect of Climate Change Risk Disclosure by Firms: Empirical Evidence Based on Textual Analysis and Machine Learning

Wenwei Guo, Baoling Mo, Yanling Chen and Zicong Huang

Emerging Markets Finance and Trade, 2025, vol. 61, issue 2, 307-326

Abstract: This study utilizes textual data from the social responsibility reports of Shanghai and Shenzhen A-share listed companies in China between 2007 and 2019. Through the application of textual analysis and machine learning technology, an index is constructed to gauge the extent of climate change risk disclosure by corporations. The paper examines the impact of climate change risk disclosure on corporate value, drawing from theoretical reasoning and empirical evidence.The findings reveal a significantly positive relationship between corporate climate change risk disclosure and corporate value, indicating the existence of a value promotion effect. Mechanism tests demonstrate that firms’ climate change risk disclosure enhances corporate transparency by attracting attention from analysts and the media. Consequently, this reduces information asymmetry and fosters an increase in corporate value. Furthermore, the study highlights that non-state-owned and high-polluting corporations exhibit a more pronounced value enhancement effect from climate change risk disclosure compared to other corporations. Additionally, corporations with highly readable and positively-toned textual information experience stronger value-promoting effects. These results provide robust empirical evidence supporting the practice of climate change risk disclosure among corporations in China.

Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/1540496X.2024.2381556 (text/html)
Access to full text is restricted to subscribers.

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:mes:emfitr:v:61:y:2025:i:2:p:307-326

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/MREE20

DOI: 10.1080/1540496X.2024.2381556

Access Statistics for this article

More articles in Emerging Markets Finance and Trade from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().