Study On The Stock Market Reaction To The Environmental Disclosure About Listed Companies Of Petrochemical Industry In China

In modern society, the rapid development of economy has brought human beings big profits. At the mean time, it also brought many environmental problems, such as over-exploitation of natural resources, greenhouse effect and abnormal weather. All of them have caused kinds of bad impact to our daily life. In the 1970s, the terrible land pollution event which happened in Japan became a world warning. Governments began to take environmental protection into consider. Many kinds of laws and legislation about environmental protection were released. The strict punishment urged the enterprises to seek sustainable development. As public environmental awareness has been raised, their consumption concept gradually transfers to "green consumption", which also impel companies to make efforts to protect the environment. Moreover, investors no longer take the financial information as the only basis for making decisions, but also take the responsibility of environment into account. Undoubtedly, the disclosure of environmental information has become enterprises’inevitable choice.As the new branch of accounting, environmental disclosure has become a new focus in the academic community. Both International Standardization Organization and Global Reporting Initiative are committed to the establishment of environmental assessment standards and disclosure system, which would help companies to disclose more environmental information with high quality. The Environment Ministry and the Stock Exchange in China have released several guidelines about environmental disclosure for Chinese listed companies. Especially for the heavily polluting industry, the supervision of environmental protection has become more and more strict. Therefore, whether the investors will change the decisions according to the environmental disclosure is the object in this paper. This research aims to study whether the stock market will react to the environmental disclosure of listed petrochemical companies in China by using event study method.At first, this paper reviews the research literatures about environmental disclosure at home and abroad. Secondly, the general conditions of foreign and domestic environmental disclosure are compared. As the oil spilling accident and chemical gas pollution always do damage to the environment, this paper chooses petrochemical industry to study. And then, the descriptive analysis on the environmental disclosure condition of Chinese listed petrochemical companies helps to know deeply about the environmental disclosure in China. Thirdly, at the basis of reviews and analysis on related economic theory, research hypotheses are put forward. In the empirical study part, the samples are collected through an authoritative website and the event study method is used to examine the hypotheses mentioned above.This paper chooses 58 cases of environmental disclosure events, including 34 positive events and 24 negative events, According to the different content of the information, two parts of samples are divided into four categories separately. By event study method, we get average abnormal return and cumulative average abnormal return of all kinds of disclosure. After statistical test, the conclusion is that the stock market doesn’t react to the environmental disclosure for the petrochemical listed companies in China. However, the market is more sensitive to negative information. Based on the conclusion, the suggestions about improving the quality of environmental disclosure in China are put forward in the last chapter.