The Impact Of China's Environmental Information Approach On Corporate Value

At present,the practice of environmental information disclosure in China revolves around the public company.On the surface,it is because public companies play an exemplary role as industry leaders;but in a deeper level,the underlying cause is that they have a clearer policy transmission mechanism.To be specific,due to the strong ties with the capital market,the disclosure of environmental information will be immediately reflected in the stock price of public companies,and then use it as a signal to stimulate corporate management to take emission reduction measures,so as to achieve the ultimate goal of environmental protection.Therefore,for the disclosure of the environmental information of public companies,the effectiveness to large extent depends on the reflection of stock market.Reviewing the development of environmental information disclosure in China,the central government and the environmental protection department have issued a lot of details to promote environmental information disclosure of listed companies since "Environmental Information Disclosure Measures(Trial)" in 2007 clearly identified the legal grounds for government to standardize the disclosure rules of enterprises.However,with the continuous improvement of the environmental information disclosure system,the environmental performance of the A share market in China has not yet been improved.Especially in recent years,public companies have repeatedly become the chief culprit of environmental accidents,so that all sectors of society are concerned about whether environmental information is effective in China.Some empirical studies also show that the practice of environmental information disclosure in China does not have a significant impact on the value of the company.What is the cause of this phenomenon? For the question,this article puts forward the view that the main reason for the failure of our environmental information disclosure is the unreasonable disclosure contents and ways,which is different from the mainstream voice of current academic circles.In order to avoid the above interference,the paper reexamines the effectiveness of environmental information disclosure in China,based on the "List of public companies causing significant environmental risks" issued by the Securities Times in 2015.The full text of the empirical part is divided into three parts,of which the specific content and the results are as follows:First,we examine whether firms associated with unfavorable environmental news would experience significant abnormal returns.At the beginning,we use event study method to estimate the impact of the first disclosure on stock returns.After that,we examine the stock market response to multiple appearances on the pollution list.It is found that pollution list has a significant negative impact on the stock market,but this effect fades after multiple disclosures of the same information.To ensure the reliability of the above results,we further make some robustness test to our model.The results showed that: 1)unlike the companies on the list,others' stock returns decreased firstly and then increased after the first announcement,which indicates that the list would incur some substitution effect;2)the trading volume trend of enterprises is broadly in line with the price change,which is consistent with the general price-volume laws of stock.Then,we explore the heterogeneity of the abnormal returns.By summarizing the existing literature,this part studies the effects of corporate basic characteristics on the abnormal returns from the following six aspects: industry concentration,industry pollution,firm size,ownership property,export and leverage,aiming to figure out which kinds of firms are vulnerable to this bad information disclosure.The results show that: 1)the size of a firm for every increase of 1% will lead to the negative increase of 0.87 percentage points for corresponding abnormal returns;2)non-polluting industries were affected even worse than the pollution ones;3)the higher export proportion of the firms involved,the less negative abnormal return they would yield;and 4)industry concentration,ownership property and leverage will not affect the abnormal return significantly.Finally,we verify and correct the real impact of the pollution list on the stock market.With the concerns of "sample selection" and "external interference",we point out that the abnormal returns shown by the companies may not be totally caused by the list.For this reason,we use propensity score matching(PSM)method to construct a "quasi-natural experiment",and then employ difference in difference(DID)method to isolate the real impact of pollution list.The principal findings are as follows: 1)there are significant differences in the basic characteristics and financial indicators,no matter for the ranked firms or not;2)the stock returns averagely experienced a total decline of 2.8 percentage points during the week before and after the announcement,of which only 2.3 percentage points were caused by the list;3)the stock prices of non-ranked firms have not experienced obvious abnormal fluctuation.Based on the above research content,the paper mainly has the following three contributions: 1)to make up the defect that the existing literature failed to prove that environmental information disclosure in China is effective;2)providing a new analytical framework for studing environmental information disclosure;3)providing valuable reference for improving China's environmental information disclosure practice.