Research On The Impact Of Environmental Administrative Penalty And Environmental Information Disclosure On Firm Value

As an important means to reduce information asymmetry and strengthen public supervision,enterprise environmental information disclosure is regarded as an effective way of environmental governance.In order to promote enterprises to fulfill their social responsibilities,the government has been committed to the construction of environmental information disclosure system.However,in reality,the environmental information disclosure of enterprises in China lacks strong supervision,and the practice of environmental information disclosure of listed companies is not optimistic.In recent years,the number of environmental penalty cases in China has increased year by year,and the problems of non-standard information disclosure and poor quality of information disclosure of penalized companies are prominent,which has a negative impact on the company’s economy.This has attracted much social and academic attention.Some literatures have revealed that environmental information disclosure is often manipulated by company management to implement impression management and legitimacy management to deal with the crisis.However,some questions have been unclear yet,how does the environmental administrative penalty affect the company’s environmental information disclosure?What is the economic effect of environmental information disclosure in the process of environmental administrative penalty affecting the value of the company?The mechanism of environmental information disclosure in environmental administrative penalty affecting the value of the company is not clear.With regard to the annual environmental information disclosure,this paper first studies the impact of environmental administrative penalties on the environmental information disclosure of listed companies,and also studies how environmental administrative penalties affects the value of companies through environmental information disclosure,and discusses the economic impact of the increment of environmental information disclosure under environmental administrative penalties.For the environmental penalty announcement,the paper studies the stock market’s response to the company’s environmental penalty announcement,and analyzes the impact of information disclosure in the announcement on the market value of listed companies.The main contents and conclusions of this paper can be summarized as follows:(1)To construct a regression model based on two-dimensional cluster correction standard error estimation,combining parameter test and endogenous test based on propensity score matching method,this paper studies the influence of environmental administrative penalty on environmental information disclosure of companies.The research found that:first,environmental administrative penalties can significantly improve the voluntary environmental information disclosure level of listed companies.Second,environmental administrative penalties reduce the mandatory environmental information disclosure level of listed companies in heavy polluting industries.Third,environmental administrative penalties significantly reduce the environmental information disclosure quality of listed companies,which is mainly reflected in weakening the relevance,reliability and readability of environmental information in the annual report of listed companies(CSR reports,environmental annual reports,etc.).This paper gives the theoretical explanation of environmental administrative penalty affecting the disclosure behavior of listed companies,which not only expands the applicability of legitimacy theory and impression management theory in the capital market of our country,but also enriches the researches on the influencing factors of enterprise environmental information disclosure.(2)On the basis of the theoretical analysis of the mechanism and path of environmental information disclosure affecting the company value,this paper constructs a mediating effect model to test the mediating role of environmental administrative penalty in the process of affecting equity capital cost,debt capital cost,expected cash flow and company value,and discusses the economic impact of environmental administrative penalty on the increment of environmental information disclosure in the process of affecting company value.It found that:first,the increment of environmental information disclosure significantly reduces the capital cost of the company and increases the expected cash flow of the company,and the increment of environmental information disclosure plays a mediating role in the process of environmental administrative penalties affecting the value of the company.Second,environmental administrative penalties increase the cost of equity capital and debt capital of the company in the following year,and reduce the expected cash flow of the company.Third,the environmental administrative penalty reduces the value of the company through the path of environmental information disclosure increment,that is,the environmental administrative penalty increases the cost of equity capital and debt capital of the company through the incremental negative environmental information disclosure,and reduces the expected cash flow,which ultimately damages the value of the company.The conclusion of the study provides an empirical basis for enhancing the attention of listed companies and investors to environmental information and for regulating environmental information disclosure of penalized listed companies.This finding not only perfects the influence mechanism of environmental administrative penalty on the value of the company,but also provides new evidence for the value relevance of the company’s environmental information disclosure,and enriches the understanding of the economy of the enterprise’s annual environmental information disclosure in the literature.(3)Taking listed companies subject to environmental administrative penalty as the research object,this paper adopts event study method to study the stock market’s reaction to environmental administrative penalties,constructs regression model to examine the relationship between environmental penalty announcements and cumulative abnormal rate of return,and examines the relationship between the contents of the announcement and the cumulative abnormal rate of return.This study reveals the impact of information disclosure on the stock price in environmental penalty announcements.This paper finds that:first,environmental administrative penalties have a negative impact on the company’s stock market,and the stock price has begun to fall before the environmental administrative penalty,and two days before the penalty began to briefly recover,and then fell.Second,for listed companies that are subject to administrative penalties from local(municipal)environmental departments,the announcement of environmental penalty will help to reduce the negative impact on the share price of listed companies,and the announcement does not damage the company’s market value.Third,information disclosure in environmental penalty announcement has a positive effect on companies’ reactions in terms of market value.Disclosing rectification measures and the impact of penalties in the announcement is beneficial to the stock price,and detailed disclosure of such information does not reduce the company’s stock price,but instead prevents the decline of the company’s stock price.After being penalized by environmental administration,disclosure of environmental information such as rectification measures is not the cause of the decline of stock price.This finding provides new evidence for the argument of the economic impact of corporate environmental information disclosure,and also enriches the cognition of the economy of corporate environmental information disclosure in the literature of relevant fields,especially the cognition of penalized information disclosureAccording to the conclusion,this paper puts forward research implications from the aspects of disclosure practice of listed companies,government supervision and investor decision making.This study provides a theoretical basis for stakeholders to understand the economy of environmental information disclosure of listed companies with environmental penalties,and helps listed companies and investors in capital markets to pay more attention to environmental information disclosure.It also provides a scientific basis for the supervision of the environmental information disclosure of listed companies,and a theoretical support for establishing and perfecting the environmental information disclosure system in China.