Executive Incentive,Internal Control And The Quality Of Carbon Disclosure

With the development of low-carbon economy,there will be more and more enterprises to participate in the wave of carbon emissions as a response to the challenge of climate change.The carbon disclosure came into being as a indicator to measure the environmental performance,and gradually highlights its importance.At this stage,corporations voluntarily disclosing carbon information are not much,and the disclosure is not standardized.To a large extent the decision-making power of information disclosure is controlled by managements.Researches suggest that internal control system can improve the quality of accounting information,in the past few years environmental protection also be included in the scope of internal control according to the basic norms and guidelines of internal control.Meanwhile,executive incentive is a effective means of restricting manager behaviors,and to a certain extent the effectiveness of executive incentive can be enlarged by internal control,thus affecting the disclosure quality.Therefore,there is a relationship between executive incentive,internal control and the quality of carbon disclosure,while the current literature less involved.In view of this,this article attempts to investigate how executive incentive affects the carbon disclosure quality,how internal control affects the carbon disclosure quality,and how the executive incentive and internal control together to affect the business' carbon disclosure quality.In this paper,normative and empirical research methods are adopted,firstly,it introduces the research background,significance,the main content and the main innovations;secondly,laying the foundation for the empirical test below,it concerns about the concept of executive incentive,the concept of internal control,the concept of the carbon disclosure,the related theories and articles;thirdly,the effective mechanism of executive incentive,internal control and the carbon disclosure is introduced,and elaborates proposed hypothesis of this paper,this paper selects the effectiveness metrics of executive incentive,internal control and the carbon disclosure,and builds regression models;fourthly,based on the listed companies in A-Share market of Shanghai and Shenzhen Stock Exchange(observation period between 2010-2014)which published CSR reports,empirical research inspects executive incentive,internal control effect on the quality of carbon disclosure.The main contribution of this paper has the following three aspects:1.Different executive incentive have different influence on carbon disclosure quality.Executive compensation incentive is negatively related to corporate carbon disclosure,meaning that salary incentive will reduce the level of the carbon disclosure.While executive share incentive shows a significant positive correlation to the carbon disclosure,that share incentive can improve the quality of carbon disclosure.2.Internal control has a significant positive effect on improving the quality of carbon disclosure,good internal control can effectively improve the carbon disclosure.And this effect is more obvious in the state-owned enterprises.3.When companies set executive compensation incentive,high quality of internal control can weaken the action which executive compensation incentive effects on carbon disclosure and then improve the level of carbon disclosure;however,for executives share incentive mechanism,high quality of internal control can not effectively promote the action which share incentive effects on carbon disclosure.Anyway,salary incentive will reduce the quality of the carbon disclosure,while share incentive can improve the carbon disclosure quality.internal control can improve the quality of carbon disclosure directly,and promote the quality indirectly through the executive incentive.