The Value Relevance Of Environmental Performance In Listed Companies

With the development of economy and society, people come to awake from the economic growth at the cost of environment, and recognize the importance of environmental protection and ecological balance. Our government also laid great stress on the environmental protection issue. Since the 1990s, our government had proposed a must for change in economic growth pattern. The government called for energy-saving accompanied by environmental protection and advocated to develop new environmentally friendly energy. However, the situation of our environment problem remains severe. A variety of environmental pollution and ecological damage are still common occurrences. Environmental incidents happened one after another. There lies a long way to go for China's environmental protection work..In this paper, we base on the status of China's environmental pollution problem, through the theoretical discussion and empirical analysis of environmental performance's impact on firm value, attempt to systematically sort out the relationship between environmental performance and firm value. and to find the empirical evidence of their relationship based on the special background of China's securities market. Through the research on the value relevance of environmental performance, this study aims to review the attention of our stock market on listed companies'environmental performance, to discover whether the stock market price companies distinguishingly by their environmental performances, so as to give full play to the guide effect of our stock market' pricing mechanism on the environmental performance of listed companies.In the layout, this article introduces the concepts of environmental performance and value relevance at first, after the literature review of value relevance of environmental performance, we begin to analyze the mechanism and ways of environmental performance affects firm value on the theoretical base of Efficient Market Hypothesis, Capital Asset Pricing Model and Theory of decision usefulness of accounting information. We adopt normative research method and empirical research method, select a sample of heavy polluting companies, collect related information for statistical analysis and arrive at the conclusion that environmental performances of listed companies have negative impact on firm values. Finally, we propose to improve the environmental performances of listed companies in the following aspects:improving environmental information disclosure system in enterprises; establishing and implementing a comprehensive environmental performance evaluation system; encouraging the Government to increase the environmental subsidies for environmental investment and penalties for environmental incidents; improve environmental awareness.