The Impact Of Environmental Regulation On Earnings Information Quality From The Perspective Of Contagion Effect

The high-quality development of macro-economy needs government environmental regulation to prevent the deterioration of ecological environment,and it also needs the high-quality development of micro enterprises,which is inseparable from the high-level quality of information disclosure.Since the Fourth Plenary Session of the 19 th CPC Central Committee,China has resolutely implemented a strict ecological civilization system,reformed and improved the working mechanism of letters and visits to the ecological environment,formulated the goals of carbon peak and carbon neutralization 30·60,promoted the harmonious coexistence of the community of common destiny of mankind,and released the signal of the escalating intensity of environmental regulation.As the main perpetrators of environmental pollution,heavily polluting enterprises are facing increasing political costs.In April2014,the National People’s Congress revised and adopted the environmental protection law of the people’s Republic of China and officially implemented it in January 2015.Then,in July 2015,the Ministry of Environmental Protection approved the measures for public participation in environmental protection,which will be implemented from September 2015,and in December 2016,the Standing Committee of the National People’s Congress adopted the environmental protection tax law implemented since January 2018,indicating that China’s environmental regulation has basically formed a set of government led regulations,It is a system of explicit and implicit environmental regulation in which enterprises are the main body,social organizations and the public participate together.The impact of macro environmental regulation on micro enterprise information disclosure depends on the response strategy of heavy polluting enterprises.The direct strategy of heavy polluting enterprises’ information disclosure is environmental information disclosure decision,and the indirect strategy is earnings information disclosure decision.Unfortunately,most of the existing studies on the economic consequences of macro environmental regulation focus on the regional level of macro government and meso industry.Most of the cross studies on the micro enterprise behavior of macro environmental regulation focus on enterprise innovation,enterprise migration,enterprise environmental protection investment,enterprise environmental information disclosure,etc,There is little literature on the indirect strategy of earnings information disclosure of micro enterprises.High quality earnings information is not only the compass of corporate governance,but also an important tool to maintain the good ecology of the capital market and the legitimate rights and interests of investors.There may be differences in the focus and effectiveness of different environmental regulations.Enterprises choose different earnings information quality strategies in the face of different types of environmental regulations.Previous studies mostly regarded the quality of enterprise earnings information as the result of independent decision-making,and believed that the quality of enterprise earnings information was mainly determined by factors such as the external environment level,the overall level of the enterprise and the individual level of decision-making.They ignored the contagion effect of enterprise earnings information quality and the mechanism of interlocking relationship,and mainly focused on the same industry single dimension discussion of the same region or enterprise group.In view of this,combined with China’s current explicit environmental regulation and implicit environmental regulation system,and based on stakeholder theory,evolutionary game theory,political cost theory and social network theory,this paper systematically combs the measurement of environmental regulation and enterprise financial decision-making behavior,enterprise earnings management motivation and enterprise earnings information quality research on the influencing factors and economic consequences of enterprise earnings information quality and the existence and influencing factors of the contagion effect of enterprise financial decision-making,respectively discuss the development process of environmental regulation and the generation of political cost of environmental problems,This paper analyzes the mechanism of environmental regulation and stakeholder information disclosure under the political cost theory and the contagion effect of enterprise earnings information quality under the social network theory.On this basis,the data of China’s heavily polluting enterprises from 2011 to 2017 are selected as the research samples,and the empirical test method is used to investigate the impact of explicit environmental regulation and implicit environmental regulation on the quality of enterprise earnings information,and to test the multidimensional contagion effect of enterprise earnings information quality under environmental regulation and the impact of the relationship between interlocked executives and interlocked shareholders on the multidimensional contagion effect of enterprise earnings information quality,and further test the impact of explicit environmental regulation and implicit environmental regulation on the quality of enterprise earnings information from the perspective of contagion effect.Firstly,this paper makes an empirical test on the impact of explicit environmental regulation and implicit environmental regulation on the quality of enterprise earnings information.Excavate and test the distinct effects of macro explicit environmental regulation and implicit environmental regulation on the quality of enterprise earnings information,further carry out heterogeneity analysis according to the product market competition and the degree of corporate risk,and analyze the financing constraints,environmental protection investment path and media attention mechanism of the impact of heterogeneous environmental regulation on the quality of enterprise earnings information,distinguish the types of explicit environmental regulation and implicit environmental regulation,test the environmental regulation tools that really inhibit or improve the quality of enterprise earnings information,distinguish the direction of earnings adjustment,group test,and use the promulgation of Atmosphere Ten Articles in 2013 as an exogenous event,the double difference model is used to further test the earnings manipulation of heavily polluting enterprises under the political cost hypothesis,which leads to the impairment of the quality of earnings information.The results show that,first,explicit environmental regulation has an inhibitory effect on the quality of enterprise earnings information,and its mechanism lies in financing constraints,environmental protection investment and media attention.Implicit environmental regulation can promote the quality of earnings information,and its mechanism lies in financing constraints and media attention.Second,the inhibitory effect of explicit environmental regulation on the quality of enterprise earnings information is only significant in the case of low product market competition and high corporate risk,and the promotion effect of implicit environmental regulation on the quality of enterprise earnings information is only significant in the case of high product market competition and low corporate risk.Third,environmental subsidies in explicit environmental regulation and public participation in implicit environmental regulation are the main environmental regulations that affect the quality of enterprise earnings information.Fourth,the inhibitory effect of explicit environmental regulation on the quality of enterprise earnings information is only significant in the case of upward earnings adjustment.After the implementation of the Atmosphere Ten Articles in 2013,heavily polluting enterprises significantly increased their controllable accrued profits.Secondly,the paper makes an empirical test on the multidimensional contagion effect of enterprise earnings information quality under environmental regulation.Investigate the impact of interlocked executives and interlocked shareholders on the multidimensional contagion effect of enterprise earnings information quality under different environmental regulation intensity,further analyze the impact mechanism from macro vertical supervision,meso product market competition and micro enterprise risk,distinguish the job attribute of interlocked executives,and test the operating circle under different environmental regulation intensity.The impact of interlocked executives of financial circle and governance circle on the regional dimension contagion effect of enterprise earnings information quality,and consider the impact of the implementation of the Atmosphere Ten Articles policy on the regional dimension contagion effect of enterprise earnings information quality.The results show that: first,there are industry,region and enterprise group dimensional contagion effects on enterprise earnings information quality under environmental regulation.Second,compared with heavily polluting enterprises with low environmental regulation intensity,the interlocking relationship of heavily polluting enterprises with high environmental regulation intensity can significantly enhance the contagion effect of earnings information quality,that is,interlocked executives can enhance the contagion effect of regional dimension,and interlocked shareholders can enhance the contagion effect of regional dimension and enterprise group dimension.Third,environmental regulation mainly affects the multidimensional contagion effect of earnings information quality of enterprises through macro vertical regulation,meso product market competition and micro enterprise risk mechanism.The higher the contagion effect of industries and enterprise groups,the higher the earnings information quality of heavily polluting enterprises subject to vertical regulation,The higher the degree of industry market competition,the stronger the regional dimension contagion effect of earnings information quality of heavily polluting enterprises,and the stronger the industrial dimension and regional dimension contagion effect of earnings information quality of heavily polluting enterprises with greater corporate risk.Fourth,compared with heavily polluting enterprises with low environmental regulation intensity,the interlocked executives of operating circle,financial circle and governance circle of heavily polluting enterprises with high environmental regulation intensity can enhance the regional dimension contagion effect;After the implementation of the Atmosphere Ten Articles in 2013,the regional dimension contagion effect of enterprise earnings information quality has increased.Finally,based on the perspective of contagion effect,this paper empirically tests the impact of explicit environmental regulation and implicit environmental regulation on the quality of enterprise earnings information.Based on the perspective of contagion effect,this paper analyzes the impact of explicit environmental regulation and implicit environmental regulation on the quality of enterprise earnings information.Further test the possible heterogeneity of this impact in the grouping of enterprise scale and environmental uncertainty.Secondly,from the perspective of contagion effect,the relationship between heterogeneous environmental regulation and enterprise earnings information quality is affected by internal control and social trust governance mechanism.Finally,it distinguishes the direction of earnings management and the types of explicit environmental regulation and implicit environmental regulation.The results show that: first,the contagion effect enhances the weakening effect of explicit environmental regulation on the earnings information quality of heavily polluting enterprises,and weakens the promotion effect of implicit environmental regulation on the earnings information quality of heavily polluting enterprises.Compared with the contagion effect of regional dimension and enterprise group dimension,the contagion effect of industry dimension can not only enhance the weakening effect of explicit environmental regulation on the quality of enterprise earnings information,but also weaken the promotion effect of implicit environmental regulation on the quality of enterprise earnings information.Second,compared with small-scale heavily polluting enterprises,the contagion effect enhances the weakening effect of explicit environmental regulation on the earnings information quality of large-scale heavily polluting enterprises,and the contagion effect weakens the enhancement effect of implicit environmental regulation on the earnings information quality of large-scale heavily polluting enterprises.In the case of low environmental uncertainty,the contagion effect is enhanced,the weakening effect of explicit environmental regulation on the earnings information quality of heavily polluting enterprises and the weakening effect of implicit environmental regulation on the improvement of earnings information quality of heavily polluting enterprises are more obvious.Third,the quality of internal control and social trust provide internal constraints and external supervision for curbing the contagion effect and amplifying the weakening effect of explicit environmental regulation on the earnings information quality of heavily polluting enterprises.Fourth,in the atmosphere of downward earnings management,the contagion effect is enhanced,the weakening effect of explicit environmental regulation on the earnings information quality of heavily polluting enterprises and the weakening effect of implicit environmental regulation on the improvement of earnings information quality of heavily polluting enterprises are more obvious.Fifth,the contagion effect is enhanced,and the weakening effect of explicit environmental regulation on the quality of enterprise earnings information is mainly through two types of explicit environmental regulation: Legislative intensity and environmental subsidy.The contagion effect weakens the role of implicit environmental regulation in improving the quality of enterprise earnings information,mainly through the implicit environmental regulation of environmental subsidy.