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Deterrence effects of disclosure: The impact of environmental information disclosure on emission reduction of firms

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  • Shi, Daqian
  • Bu, Caiqi
  • Xue, Huiyuan

Abstract

Few firm-level empirical studies have been conducted to test whether environmental information disclosure (EID) policy remains effective in pollution control and improving environmental performance. We treat the release of the Pollutant Information Transparency Index (PITI) in 2008 as a quasi-natural experiment, using matched data from the Chinese industrial firm database and the Chinese industrial firm pollution database from 2003 to 2012 and adopting the difference-in-differences (DID) method to estimate the emission reduction effect and mechanism of EID on SO2 emissions of firms. The results show that there is a significant emission reduction effect of EID on industrial firms and it still holds after a series of robustness checks. The heterogeneity analysis suggests that EID has a superior pollution emission reduction effect on private firms, large-scale firms and firms in the western region. To gain a more in-depth understanding of how emerging environmental regulations such as EID can affect the pollution emission behavior of firms, we further conduct mechanism tests and find that EID may induce non-compliant firms to reduce emissions by both improving the energy structure of firms and restructuring capital factors. In addition, this study verifies the moderating effect of local government environmental governance in the emission reduction process of EID. Local government can strengthen the enforcement of environmental regulations in order to improve the disclosed information content and send green signals, which in turn promotes firms to reduce emissions. This is conducive to further regularizing the disclosure content of EID and exerting the environmental governance effect of EID. It provides new support for local governments to better use the power of disclosure in the information age to encourage non-compliant firms to control pollution.

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  • Shi, Daqian & Bu, Caiqi & Xue, Huiyuan, 2021. "Deterrence effects of disclosure: The impact of environmental information disclosure on emission reduction of firms," Energy Economics, Elsevier, vol. 104(C).
    • Handle: RePEc:eee:eneeco:v:104:y:2021:i:c:s0140988321005363
    DOI: 10.1016/j.eneco.2021.105680
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    7. Rongjiang Cai & Tao Lv & Cheng Wang & Nana Liu, 2023. "Can Environmental Information Disclosure Enhance Firm Value?—An Analysis Based on Textual Characteristics of Annual Reports," IJERPH, MDPI, vol. 20(5), pages 1-21, February.
    8. Hui Hou & Yuanyuan Wang & Minglang Zhang, 2024. "Impact of environmental information disclosure on green finance development: empirical evidence from China," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(8), pages 20279-20309, August.
    9. Zhiqiao Xiong & Dandan Li & Hongwei Yu, 2023. "Does PM2.5 (Pollutant) Reduce Firms’ Innovation Output?," IJERPH, MDPI, vol. 20(2), pages 1-19, January.
    10. Zhao, Xing & Guo, Yifan & Feng, Tianchu, 2023. "Towards green recovery: Natural resources utilization efficiency under the impact of environmental information disclosure," Resources Policy, Elsevier, vol. 83(C).
    11. Zhang, Yijun & Wang, Haowen & Ruan, Shengzhe & Cheng, Jinhua & Song, Yi, 2024. "Effects of environmental information disclosure on the green development of mining industry: Evidence from Chinese provincial mining sub-sectors," Resources Policy, Elsevier, vol. 89(C).
    12. Qiong Xu & Xin Li & Fei Guo, 2023. "Digital transformation and environmental performance: Evidence from Chinese resource‐based enterprises," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(4), pages 1816-1840, July.
    13. Xu, Hao & Xu, Jingxuan & Wang, Jie & Hou, Xiang, 2023. "Reduce production or increase efficiency? Hazardous air pollutants regulation, energy use, and the synergistic effect on industrial enterprises' carbon emission," Energy Economics, Elsevier, vol. 126(C).
    14. Xiao Han & Yining Chen & Hehua Zhao, 2023. "Temporal–Spatial Evolution, Influencing Factors, and Driving Mechanisms of Environmental Regulation Performance Disparities: Evidence from China," Sustainability, MDPI, vol. 15(15), pages 1-26, July.
    15. Xiuyun Yang & Qi Han, 2023. "Nonlinear Effects of Environmental Data Disclosure on Urban Pollution Emissions: Evidence from China," Sustainability, MDPI, vol. 15(14), pages 1-18, July.
    16. Haoqiang Yuan, 2024. "Investigating the Nexus Between Environmental Information Disclosure and Green Development Efficiency: The Intermediary Role of Green Technology Innovation—a PSM-DID Analysis," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(3), pages 11653-11683, September.
    17. Lu, Jin & Wang, Tianhui & Liu, Xihua, 2023. "Can environmental governance policy synergy reduce carbon emissions?," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 570-585.
    18. Wang, Xuliang & Xu, Lulu & Ye, Qin & He, Shi & Liu, Yi, 2022. "How does services agglomeration affect the energy efficiency of the service sector? Evidence from China," Energy Economics, Elsevier, vol. 112(C).
    19. Jing‐Yue Liu & Yue‐Jun Zhang & Charles H. Cho, 2023. "Corporate environmental information disclosure and green innovation: The moderating effect of CEO visibility," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(6), pages 3020-3042, November.
    20. Linghu, Jingying & Guo, Chengcheng, 2024. "Digital government: The new player in improving mining companies’ environmental performance?," Resources Policy, Elsevier, vol. 93(C).
    21. Nie, Liang & Zhang, ZhongXiang, 2023. "Is high-speed rail heading towards a low-carbon industry? Evidence from a quasi-natural experiment in China," Resource and Energy Economics, Elsevier, vol. 72(C).
    22. Wu, Huaqing & Wang, Ling & Peng, Fei, 2024. "Does it pay to be green? The impact of emissions reduction on corporate tax burden," Journal of Asian Economics, Elsevier, vol. 91(C).

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    More about this item

    Keywords

    Environmental information disclosure; Environmental regulation; Emission reduction; Difference-in-differences; Moderating effect;
    All these keywords.

    JEL classification:

    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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