Research On Driving Mechanism Of Corporate Environmental Information Disclosure

Environmental degradation has become an increasing concern in recent years inChina. In order to promote enterprises in taking up their environmental responsibility,state environmental protection departments and the public have begun to realize thatdisclosure of environmental information can be used as an important tool to regulatecorporate environmental practices. However, how to drive corporate discloseenvironmental information in timely and truly needs to be addressed urgently in China.Based on identifying and measuring the levels of corporate environmentalinformation disclosure (EID), this study recognizes external important stakeholders andhow these stakeholders act upon companies, explores industrial competition effects oncorporate EID, reveals how internal economic motivation drives EID, and sheds lighton the heterogeneity of environmental attitudes of top executives. Through empiricalresearch with a large sample of manufacturing listed companies, from the perspectiveof multiple theories, such as stakeholder theory, legitimacy theory, and impressionmanagement theory, the study aims to look for how to explain the behaviors of Chinesecorporate EID and explores effective governance.The contents of this study have four parts, and the conclusions mainly include:First, this study sheds light on the role of internal top executives in individual level.Top executives will ultimately decide whether to disclose environmental informationand how much and what to disclose. On the one hand, the relationship betweenbiographical characteristics of top executives of listed manufacturing companies andthe level of corporate EID is examined from the upper echelons theory. The resultsindicated that those Chinese current top executives are consistent with passive attitudefor EID in their short tenure. On the other hand, whether top executives’ turnoverinfluences environmental information disclosure is initial explored. The phenomenonhas witnessed that corporate TET has, to a certain extent, affected its environmentalinformation disclosure. In particular, the important reasons of involuntary and negativechairmen departure and forced resignation are negatively associated with corporate disclosure of environmental responsibility.Second, this study focuses on the relationship between economic performance,environmental performance and EID in enterprise trait level. The first section isexamines whether economic performance could affect EID and how the relationship isdetermined by the form of ownership from voluntarism to regulation under the currentChinese context. The empirical results show that the relationship between firms’performance and EID is complex and the interactive impact of ownership andeconomic performance on EID significantly varies from voluntary disclosure tomandatory disclosure. This study provides a more comprehensive understanding of themotivations in corporate EID, that is, the performance–impression theory can be usedto explain the disclosure behaviors during the period of voluntary disclosure, while thepressure–legitimacy theory can be used during the period of mandatory disclosure. Thesecond section is investigating on environmental violation enterprises, and finds thatenvironmental violation enterprises disclose more soft information to show itslegitimacy, while environmental well-performed enterprises disclose more specificinformation. Moreover, violation enterprises also avoid disclosing negativeenvironmental information although the violation behaviors have been exposed.Third, this study reveals the effect of product market competition on EID inindustry level. Using cost-benefit analysis, we find that the relationship betweenproduct market competition and corporate EID is curvilinear, that is, either too much ortoo little industrial competition lead to lower industrial disclosure of environmentalresponsibility. In addition, we find the effect of firm-level market power on thefirm-level EID follows a similar logic. Our results reveal that EID is strategicallychosen and related to competitive situations.Forth, based on stakeholder theory, this paper adopts an environmental event andanalyzes the behaviors and requirements of stakeholders and corporate responses atdifferent stages．The results show that different stakeholders had different interests andinfluence on corporate EID, and acted with different modes in the four crisis stages (i.e.,prodromal, breakout or acute, response, and recovery).The main innovations of this paper are as follows:(1) extending the determinantsof EID into the top executive’s level from the upper echelons theory, which is helpful toopen the black box of EID decisions for future research; investigating systematicallythe influences of top executives’ turnover on EID which further discover the micromechanism related to top executives;(2) making breakthrough in the theory ofrelationship between economic performance, environmental performance and EID,which shows that the two traditional theories (legitimacy and voluntary disclosure theory) is not mutually exclusive, but can be integrated to explain the behaviors ofcorporate EID;(3) investigating the relationship between the product marketcompetition and EID, and suggesting that competition is a very important determinantin the framework of corporate EID, and (4) revealing the power of stakeholders uponthe firms was not parallel, but mutually interacted and thereby formed complex drivingforces, and the core stakeholders of corporate environmental information disclosure andtheir appeal, as well as the mode of stakeholder’s pressure evoluting in the four stages,which enriched the stakeholder theory in the domain of disclosure of corporateenvironmental responsibility.