RESEARCH ARTICLE
Confession or justification: The effects of environmental disclosure on corporate green innovation in China
Xiaojian Xiang,
Chuanjiang Liu,
Mian Yang,
Xiaomeng Zhao,
Xiaojian Xiang
Economics and Management School, Wuhan University, Wuhan, 430072 China
Search for more papers by this authorChuanjiang Liu
Economics and Management School, Wuhan University, Wuhan, 430072 China
Search for more papers by this authorCorresponding Author
Mian Yang
Economics and Management School, Wuhan University, Wuhan, 430072 China
Correspondence
Mian Yang, Economics and Management Schoool, Wuhan University, Wuhan 430072, China.
Email: yangmian909@163.com
Search for more papers by this authorXiaomeng Zhao
School of Economics and Business Administration, Central China Normal University, Wuhan, 430079 China
Search for more papers by this authorXiaojian Xiang,
Chuanjiang Liu,
Mian Yang,
Xiaomeng Zhao,
Xiaojian Xiang
Economics and Management School, Wuhan University, Wuhan, 430072 China
Search for more papers by this authorChuanjiang Liu
Economics and Management School, Wuhan University, Wuhan, 430072 China
Search for more papers by this authorCorresponding Author
Mian Yang
Economics and Management School, Wuhan University, Wuhan, 430072 China
Correspondence
Mian Yang, Economics and Management Schoool, Wuhan University, Wuhan 430072, China.
Email: yangmian909@163.com
Search for more papers by this authorXiaomeng Zhao
School of Economics and Business Administration, Central China Normal University, Wuhan, 430079 China
Search for more papers by this authorFunding information: National Natural Science Foundation of China, Grant/Award Numbers: 71774122, 71874064, 71503094; National Social Science Foundation of China, Grant/Award Numbers: 16ZDA006, 16ZDA039, 17ZDA036
Abstract
As one type of voluntary environmental regulations, environmental disclosure plays an important role in promoting sustainable development of enterprises by enhancing their environmental awareness. Based on the social responsibility and annual reports published by heavily polluting listed companies in China between 2007 and 2016, this article investigates their environmental disclosure and assesses the impact on their green innovation activities as well as its influence mechanisms. Text analysis is used to measure the environmental disclosure by way of three dimensions including environmental investment and management, environmental supervision and agency certification, and environmental performance and governance. The results of the Poisson regression model for panel data show that environmental disclosure has significantly encouraged green innovations carried out by heavily polluting listed companies in China during the past decade and this result is consistent with a variety of robustness checks. Besides, the mediation effect test demonstrates that environmental disclosure stimulated green innovations of heavily polluting listed companies by expanding their financing channels, promoting their product sales, and raising media attention.
REFERENCES
- Aerts, W., & Cormier, D. (2009). Media legitimacy and corporate environmental communication. Accounting Organizations & Society, 34(1), 27. https://doi.org/10.1016/j.aos.2008.02.005
- Ahern, K., & Sosyura, D. (2015). Rumour has it: Sensationalism in financial media. Review of Financial Studies, 28, 2050–2093. https://doi.org/10.2139/ssrn.2264468
- Albino, V., Ardito, L., Dangelico, R. M., & Messeni Petruzzelli, A. (2014). Understanding the development trends of low-carbon energy technologies: A patent analysis. Applied Energy, 135, 836–854. https://doi.org/10.1016/j.apenergy.2014.08.012
- Albuquerque, R., Koskinen, Y., & Zhang, C. D. (2019). Corporate social responsibility and firm risk: Theory and empirical evidence. Management Science, 65(10), 4451–4469. https://doi.org/10.2139/ssrn.1961971
- Amore, M. D., & Bennedsen, M. (2015). Corporate governance and green innovation. Journal of Environmental Economics and Management, 75, 54–72. https://doi.org/10.1016/j.jeem.2015.11.003
- Baron, R. M., & Kenny, D. A. (1986). The moderator-mediator variable distinction in social psychological research: Conceptual, strategic, and statistical considerations. Journal of Personality and Social Psychology, 51(6), 1173–1182. https://doi.org/10.1037/0022-3514.51.6.1173
- Bhandari, A., & Javakhadze, D. (2017). Corporate social responsibility and capital allocate on efficiency. Journal of Corporate Finance, 43, 354–377. https://doi.org/10.1016/j.jcorpfin.2017.01.012
- Cameron, A. C., & Trivedi, P. K. (2005). Nonlinear Panel Models. In Microeconometrics, methods and applications (pp. 779–809). Cambridge: Cambridge University Press.
10.1017/CBO9780511811241.029 Google Scholar
- Calel, R., & Dechezleprêtre, A. (2016). Environmental policy and directed technological change: Evidence from the European carbon market. The Review of Economics and Statistics, 98, 173–191. https://doi.org/10.2139/ssrn.2024870
- Cheng, Z. H., Wang, F., Keung, C., & Bai, Y. X. (2017). Will corporate political connection influence the environmental information disclosure level? Based on the panel data of a-shares from listed companies in shanghai stock market. Journal of Business Ethics, 143(1), 209–221. https://doi.org/10.1007/s10551-015-2776-0
- Clarkson, P. M., Li, Y., Richardson, G. D., & Vasvari, F. P. (2008). Revisiting the relation between environmental performance and environmental disclosure: An empirical analysis. Accounting, Organizations and Society, 33(4–5), 327. https://doi.org/10.1016/j.aos.2007.05.003
- Cleveland, C. J. (2005). Dynamic incentives by environmental policy instruments—A survey. Ecological Economics, 54(2), 175–195. https://doi.org/10.1016/j.ecolecon.2004.12.028
- Costantini, V., Crespi, F., & Palma, A. (2017). Characterizing the policy mix and its impact on eco-innovation: A patent analysis of energy-efficient technologies. Research Policy, 46(4), 799–819. https://doi.org/10.1016/j.respol.2017.02.004
- Czarnitzki, D., & Hottenrott, H. (2011). R&D investment and financing constraints of small and medium-sized firms. Small Business Economics., 36(1), 65–83. https://doi.org/10.1007/s11187-009-9189-3
- Fischer, C., & Newell, R. G. (2008). Environmental and technology policies for climate mitigation. Journal of Environmental Economics & Management, 55(2), 162. https://doi.org/10.1016/j.jeem.2007.11.001
- García-Sánchez, I. M., & Martínez-Ferrero, J. (2017). Independent directors and CSR disclosures: The moderating effects of proprietary costs. Corporate Social Responsibility and Environmental Management, 24(1), 28–43. https://doi.org/info:doi/10.1002/csr.1389
- Gray, R., Kouhy, R., & Lavers, S. (1995). Corporate social and environmental reporting: A review of the literature and a longitudinal study of UK disclosure. Accounting, Auditing & Accountability Journal, 8, 47–77. https://doi.org/10.1108/09513579510146996
- Greene W. H. (1994). Accounting for excess zeros and sample selection in Poisson and negative binomial regression models. Working Paper EC-94-10: Department of Economics, New York University.
- Gurmu, S., & Trivedi, P. K. (1996). Excess zeros in count models for recreational trips. Journal of Business & Economic Statistics, 14(4), 469–477. https://doi.org/10.1080/07350015.1996.10524676
- Hayes, A. F. (2009). Beyond Baron and Kenny: Statistical mediation analysis in the new millennium. Communication Monographs, 76(4), 408–420. https://doi.org/10.1080/03637750903310360
- Horbach, J., Rammer, C., & Rennings, K. (2012). Determinants of eco-innovations by type of environmental impact—The role of regulatory push/pull, technology push and market pull. Ecological Economics, 78, 112–122. https://doi.org/10.1016/j.ecolecon.2012.04.005
- Huang, J. W., & Li, Y. H. (2015). Green innovation and performance: The view of organizational capability and social reciprocity. Journal of Business Ethics, 145(2), 309–324. https://doi.org/10.1007/s10551-015-2903-y
- Jens, H. (2008). Determinants of environmental innovation—New evidence from German panel data sources. Research Policy, 37(1), 163–173. https://doi.org/10.1016/j.respol.2007.08.006
- Jiang, Z. Y., Wang, Z. J., & Zeng, Y. Q. (2019). Can voluntary environmental regulation promote corporate technological innovation? Business Strategy and the Environment, 29, 1–17. https://doi.org/10.1002/bse.2372
- Johnstone, N., Haŝŝiĉ, I., & Popp, D. (2010). Renewable energy policies and technological innovation: Evidence based on patent counts. Environmental & Resource Economics, 45(1), 133–155. https://doi.org/10.1007/s10640-009-9309-1
- Johnstone, N., & Labonne, J. (2009). Why do manufacturing facilities introduce environmental management systems? Improving and/or signalling performance. Ecological Economics, 68(3), 719–730. https://doi.org/10.1016/j.ecolecon.2008.06.003
- Kaul, A. (2012). Technology and corporate scope: Firm and rival innovation as antecedents of corporate transactions. Strategic Management Journal, 33, 347–367. https://doi.org/10.1002/smj.1940
- Kiso, T. (2019). Environmental policy and induced technological change: Evidence from automobile fuel economy regulations. Environmental and Resource Economics, 74(2), 785–810. https://doi.org/10.1007/s10640-019-00347-6
- Kouloukoui, D., Sant'Anna, Â. M. O., Gomes, d. S., Maria, S., Mara, D. O. M. M., De Jong, P., et al. (2019). Factors influencing the level of environmental disclosures in sustainability reports: Case of climate risk disclosure by Brazilian companies. Corporate Social Responsibility and Environmental Management, 26(4), 791–804. https://doi.org/10.1002/csr.1721
- Larcker, D. F., & Rusticus, T. O. (2008). On the use of instrumental variables in accounting research. Journal of Accounting & Economics, 49(3), 186–205. https://doi.org/10.1016/j.jacceco.2009.11.004
- Li, D. Y., Huang, M., Ren, S. G., Chen, X. H., & Ning, L. T. (2016). Environmental legitimacy, green innovation, and corporate carbon disclosure: Evidence from CDP China 100. Journal of Business Ethics, 150(4), 1089–1104. https://doi.org/10.1007/s10551-016-3187-6
- Lim, S., & Prakash, A. (2014). Voluntary regulations and innovation: The case of ISO 14001. Public Administration Review, 74(2), 233–244. https://doi.org/10.1111/puar.12189
- Lindman, S., & Sderholm, P. (2015). Wind energy and green economy in Europe: Measuring policy-induced innovation using patent data. Applied Energy, 179, 1351–1359. https://doi.org/10.1016/j.apenergy.2015.10.128
- Lu, B. B. (2013). Expedited patent examination for green inventions: Developing countries' policy choices. Energy Policy, 61, 1529–1538. https://doi.org/10.1016/j.enpol.2013.06.028
- Luong, H., Moshirian, F., Nguyen, L., Tian, X., & Zhang, B. H. (2017). How do foreign institutional investors enhance firm innovation? Journal of Financial and Quantitative Analysis, 52(4), 1449–1490. https://doi.org/10.2139/ssrn.2409909
- Marzucchi, A., & Montresor, S. (2017). Forms of knowledge and eco-innovation modes: Evidence from Spanish manufacturing firms. Ecological Economics, 131, 208–221. https://doi.org/10.1016/j.ecolecon.2016.08.032
- Mullainathan, S., & Shleifer, A. (2005). The market for news. American Economic Review, 95(4), 1031–1053. https://doi.org/10.1257/0002828054825619
- Nègre, E., Verdier, M. A., Cho, C. H., & Patten, D. M. (2017). Disclosure strategies and investor reactions to downsizing announcements: A legitimacy perspective. Journal of Accounting and Public Policy, 36(3), 239–257. https://doi.org/10.1016/j.jaccpubpol.2017.03.003
- Patten, D. M. (2002). Media exposure, public policy pressure, and environmental disclosure: An examination of the impact of tri data availability. Accounting Forum, 26(2), 152–171. https://doi.org/10.1111/1467-6303.t01-1-00007
10.1111/1467-6303.t01-1-00007 Google Scholar
- Plumlee, M., Brown, D., Hayes, R. M., & Marshall, R. S. (2015). Voluntary environmental disclosure quality and firm value: Further evidence. Journal of Accounting & Public Policy, 34(4), 336–361. https://doi.org/10.1016/j.jaccpubpol.2015.04.004
- Popp, D. (2002). Induced innovation and energy prices. American Economic Review, 92(1), 160–180. https://doi.org/10.1257/000282802760015658
- Preacher, K. J., & Kelley, K. (2011). Effect size measures for mediation models: Quantitative strategies for communicating indirect effects. Psychological Methods, 16(2), 93–115. https://doi.org/10.1037/a0022658
- Przychodzen, W., de la Hiz, D. I. L., & Przychodzen, J. (2020). First-mover advantages in green innovation—Opportunities and threats for financial performance: A longitudinal analysis. Corporate Social Responsibility and Environmental Management, 27(1), 339–357. https://doi.org/10.1002/csr.1809
- Rennings, K. (2000). Redefining innovation —eco-innovation research and the contribution from ecological economics. Ecological Economics, 32(2), 319–332. https://doi.org/10.1016/s0921-8009(99)00112-3
- Rennings, K., Ziegler, A., Ankele, K., & Hoffmann, E. (2006). The influence of different characteristics of the EU environmental management and auditing scheme on technical environmental innovations and economic performance. Ecological Economics, 57(1), 45–59. https://doi.org/10.1016/j.ecolecon.2005.03.013
- Song, W., & Yu, H. (2017). Green innovation strategy and green innovation: The roles of green creativity and green organizational identity. Corporate Social Responsibility and Environmental Management, 25(2), 135–150. https://doi.org/10.1002/csr.1445
- Stanko, M. A., & Henard, D. H. (2017). Toward a better understanding of crowdfunding, openness and the consequences for innovation. Research Policy, 46(4), 784–798. https://doi.org/10.1016/j.respol.2017.02.003
- Svensson, J., & Fisman, R. (2007). Are corruption and taxation really harmful to growth? Firm level evidence. Journal of Development Economics, 83(1), 63–75. https://doi.org/10.1016/j.jdeveco.2005.09.009
- Vargo, S. L., & Lusch, R. F. (2004). Evolving to a new dominant logic for marketing. Journal of Marketing, 68(1), 1–17. https://doi.org/10.1509/jmkg.68.1.1.24036
- Vennemo, H., Aunan, K., Lindhjem, H., & Seip, H. M. (2009). Environmental pollution in China: Status and trends. Review of Environmental Economics & Policy, 3(2), 209–230. https://doi.org/10.1093/reep/rep009
- Wang, Y. B., Michael, S., Delgado, N. K., & Vicki, L. B. (2019). Good news for environmental self-regulation? Finding the right link. Journal of Environmental Economics and Management, 94, 217–235. https://doi.org/10.1016/j.jeem.2019.01.009
- Weber, O. (2014). Environmental, social and governance reporting in China. Business Strategy and the Environment, 23(5), 303–317. https://doi.org/10.1002/bse.1785
- Wen, Z. L., & Ye, B. J. (2014). Analyses of mediating effects: The development of methods and models. Advances in Psychological Science, 22(5), 731–745. https://doi.org/10.3724/sp.j.1042.2014.00731
10.3724/SP.J.1042.2014.00731 Google Scholar
- Wiseman, J. (1982). An evaluation of environmental disclosures made in corporate annual reports. Accounting, Organizations and Society, 7(1), 53–63. https://doi.org/10.1016/0361-3682(82)90025-3
- Wooldridge, J. M. (2015). Introductory econometrics: A modern approach, 6th ed, (pp. 525–566). Boston: Cengage Learning.
- Wu, W., Liang, Z., & Zhang, Q. (2020). Effects of corporate environmental responsibility strength and concern on innovation performance: The moderating role of firm visibility. Corporate Social Responsibility and Environmental Management, 27(3), 1487–1497. https://doi.org/10.1002/csr.1902
- Zhao, X., Lynch, J. G., Jr., & Chen, Q. (2010). Reconsidering Baron and Kenny: Myths and truths about mediation analysis. Journal of Consumer Research, 37, 197–206. https://doi.org/10.1086/651257
- Zhu, J. M., Fan, Y. C., Deng, X. H., & Xue, L. (2019). Low-carbon innovation induced by emissions trading in China. Nature Communications, 10(1), 1–8. https://doi.org/10.1038/s41467-019-12213-6
