Internal Control Enforcement, Product Market Competition And Corporate Environmental Information Disclosure Quality

Corporate environmental information disclosure is becoming an important way to protect stakeholders’ right of knowing the information along with the rising concerns by the government and the public on environmental issues. How to improve the quality of corporate environment information disclosure raises widely concern in academia. The existing literature mainly analyses in the perspectives of environmental regulation, media supervision and corporate governance. But the findings vary greatly that deserve to further innovative research ideas. The paper argues that internal control is the self-restraint mechanism of enterprises to implement environmental policies, and market competition is an “invisible hand” to regulate corporate environmental behavior. Both of them may have an important influence on corporate environmental information disclosure decisions. Therefore, internal control and market competition factor should be drawn in the research to explore environmental information disclosure from corporate internal and external angles. So, based on environmental constraints and institutional backgrounds that Chinese enterprises are facing, this thesis studies the relationship of internal control enforcement, product market competition and corporate environmental information disclosure quality.First, the thesis builds theoretical framework of internal control enforcement, product market competition and corporate environmental information disclosure quality based on institutional theory, legitimacy theory, agency theory, information asymmetry theory and competition theory. Secondly, using content analysis method, the paper designs corporate environmental information disclosure quality evaluation system and selects A-share companies in heavy pollution industries listed in Shanghai and Shenzhen stock market from 2008 to 2013 as research sample. To appraise quantitatively the environmental information disclosed by sample companies, it compares and analyses entirely in terms of year, content, industry and market. Then, the paper empirically tests the individual effect for corporate environmental information disclosure quality by internal control enforcement and product market competition, and analyses the differences caused by different nature of property rights. Based on this, it empirically tests the regulating action by product market competition for the relationship of internal control enforcement and corporate environmental information disclosure quality. Further lead in political connection factor, it investigates the effects of different degree of corporate political connection on the triadic relationships. The study found that:(1) the greater internal control enforcement, the higher the corporate environmental information disclosure quality. And in state-owned enterprises, the positive correlation is more significant. Effective enforcement of internal control has a positive role in promoting environmental information disclosure quality.(2) The more intense product market competition, the lower the quality of corporate environmental information disclosure. And the negative relation is more significant in state-owned enterprises.(3) Intense competition in product markets should weaken the positive correlation of internal control enforcement and corporate environmental information disclosure quality. In addition, in companies with high political connection, there is a more significant inhibition on the relationship by product market competition. Finally, according to the research findings, in order to improve the quality of corporate environmental information disclosure, the thesis proposes recommendations as improving corporate environmental information disclosure system; perfecting corporate environmental management internal control system; improving the mechanism of market competition and innovating environmental public participation mechanisms.The study of this thesis has extended the perspective of the influence factors research of corporate environmental information disclosure quality and enriched the relevant literature that researching market mechanism affecting the performance of internal control. It also provides evidences for enterprises to improve environmental information disclosure quality and better fulfill environmental responsibility.