Increased firm profitability under a nationwide environmental information disclosure program? Evidence from China
Environmental information disclosure has been widely used as an approach of pollution reduction. But its impact on firms' competitiveness is not adequately studied in the literature. To fill this gap, this paper empirically investigates how China's first national environmental information...
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| Published in: | Journal of cleaner production 2019-09, Vol.230, p.1176-1187 |
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| Main Authors: | , , |
| Format: | Article |
| Language: | eng |
| Subjects: | |
| Online Access: | Get full text |
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| Summary: | Environmental information disclosure has been widely used as an approach of pollution reduction. But its impact on firms' competitiveness is not adequately studied in the literature. To fill this gap, this paper empirically investigates how China's first national environmental information disclosure program affects the profitability of a panel of Chinese industrial firms using China's annual surveys of manufacturing firms and its pollution information transparency indexes at the city level. We find that stricter environmental disclosure in China leads to increased firm profitability, lending support to the Porter hypothesis. And the results are robust to various robustness checks. In addition, the results show that the environmental disclosure program in China increases industrial firms' propensity to innovate as well as innovating firms' innovation intensity. Thus, the findings of this paper provide more rationales for governments to use environmental information disclosure as a mean of pollution reduction.
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•China's environmental information disclosure program increases firm profitability.•Stricter environmental disclosure also leads to increased firm innovation.•Increased innovation is necessary for increased profitability.•The results lend support to the Porter hypothesis.•The results encourage the use of environmental information disclosure programs. |
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| ISSN: | 0959-6526 1879-1786 |