Impact of official assessment and political connections on corporate environmental information disclosure: evidence from state-owned enterprises in China’s heavy-polluting industries

The disclosure of information is a necessary tool for the management of severe environmental problems, revealing how resources are used and pollution managed. This article examines the connections between corporate executives’ political connections and the quality of the environmental information their enterprises disclose. It also explores the regulatory role of the assessments of officials’ environmental performance. Using panel data of 236 state-owned enterprises in heavy-polluting industries listed on the Shanghai and Shenzhen stock exchanges from 2012 to 2016, the results show that the political connection has a significant positive effect on improving the quality of the environmental information disclosure at the 5% confidence level, and every one level increase in the political connection will improve the level of corporate environmental information disclosure by 17.8%. And also, taking environmental performance as an evaluation category for promotion purposes had a significant positive adjustment effect on the relationship between the political connections of the leader of a state-owned enterprise and the quality of environmental information that enterprise disclosed at the 10% confidence level. As our findings suggest, the evaluation of the environmental information disclosed by enterprises in emerging economies such as China requires caution. The leaders of these companies are affected by economic incentives, but are also focused on the political incentives brought about by mandatory regulations. The research provides an empirical basis for the effectiveness of environmental regulation on environmental information disclosure and also helps to understand the impact of official assessment mechanism in China’s environmental development.