Corporate Environmental Information Disclosure and Investor Response: Empirical Evidence from China's Capital Market

Jia Meng and ZhongXiang Zhang
Additional contact information
Jia Meng: Ma Yinchu School of Economics, Tianjin University, Tianjin, China

No 2022.03, Working Papers from Fondazione Eni Enrico Mattei

Abstract: This paper aims at analyzing the impact of corporate environmenral information disclosure from the perspective of investors. To that end, we have collected environmental information disclosure data of all Chinese listed companies from 2004 to 2020 and controlled the impacts of annual reports on investor response. We apply the Fama-French five-factor model to calculate the accumulative abnormal returns of stocks during the event window period. Our results suggest that environmental information disclosure can have a significant negative response among investors when we take the impacts of annual reports into consideration. Moreover, we find that heavy-polluting companies and companies with high institutional shareholding are more likely to have negative reactions from investors. Notably, the negative response is found significant after the Ambient Air Quality Standard was revised in 2012. Furthermore, high environmental expenditure and strict environmental regulation will result in negative investor responses, while the political connection can alleviate the negative impacts of environmental information disclosure. The results remain robust in different ways. The findings suggest that listed companies may lack the incentive to engage in environmental management and are reluctant to disclose environmental information. Consequently, the government should formulate a mandatory disclosure policy and provide administrative support to environmentalfriendly companies. Besides, companies should improve innovation technology to cut down environmental costs. Meanwhile, investors should be aware of the importance of corporate environmental behaviors and realize the long-term benefits of environmental management of listed companies.

Keywords: Environmental information disclosure; Investor response; Corporate annual reports; Fama-french five factor model; China's capital market (search for similar items in EconPapers)
JEL-codes: L24 O3 (search for similar items in EconPapers)
Date: 2022-01
New Economics Papers: this item is included in nep-cfn, nep-cna and nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (23)

Downloads: (external link)
https://feem-media.s3.eu-central-1.amazonaws.com/w ... oads/NDL2022-003.pdf (application/pdf)

Related works:
Working Paper: Corporate Environmental Information Disclosure and Investor Response: Empirical Evidence from China's Capital Market (2022)
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:fem:femwpa:2022.03

Access Statistics for this paper

More papers in Working Papers from Fondazione Eni Enrico Mattei Contact information at EDIRC.
Bibliographic data for series maintained by Alberto Prina Cerai ( this e-mail address is bad, please contact ).