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Mandatory greenhouse gas emissions reporting and firm environmental litigation risk

Author

Listed:
  • Chen Huang
  • Victoria Patsika
  • Androniki Triantafylli
  • Yu Zhang

Abstract

We investigate the impact of mandatory non-financial reporting on corporate environmental litigation risk. Using a difference-in-difference research design, we reveal that the introduction of the Greenhouse Gas Reporting Program (GHGRP) in the U.S. reduces corporate environmental litigation risks. The result is robust to various sensitivity checks, including placebo tests. Further analysis documents that the enhanced corporate social responsibility in the post-GHGRP period serves as a channel for the lowered litigation risk. We also find that the effect of GHGRP on reducing litigation risk is more pronounced in the headquarters location with a large population because firms face greater community stakeholder pressure. Further empirical evidence shows that GHGRP attracts more investors’ attention, thereby leading to worsened stock returns around the litigation. Overall, the study emphasizes the critical role of mandatory GHG emissions reporting practice in shaping firms’ environment-related behavior.

Suggested Citation

  • Chen Huang & Victoria Patsika & Androniki Triantafylli & Yu Zhang, 2023. "Mandatory greenhouse gas emissions reporting and firm environmental litigation risk," Accounting Forum, Taylor & Francis Journals, vol. 47(2), pages 249-277, April.
    • Handle: RePEc:taf:accfor:v:47:y:2023:i:2:p:249-277
    DOI: 10.1080/01559982.2022.2158519
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    Cited by:

    1. Maheshika Senanayake & Iman Harymawan & Gregor Dorfleitner & Seungsoo Lee & Jay Hyuk Rhee & Yong Sik Ok, 2024. "Toward More Nature-Positive Outcomes: A Review of Corporate Disclosure and Decision Making on Biodiversity," Sustainability, MDPI, vol. 16(18), pages 1-24, September.
    2. Fahad Khalid & Juncheng Sun & Jiawei Guo & Mohit Srivastava, 2024. "Green corporate image: Assessing the effects of climate change management practices on corporate reputation," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(3), pages 1786-1801, May.

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