Can Environmental Information Disclosure Enhance Firm Value?—An Analysis Based on Textual Characteristics of Annual Reports

Abstract

This study examines the impact of environmental information disclosure quality on firm value for Chinese listed companies in heavily polluting industries from 2010 to 2021. By controlling for the level of leverage, growth, and corporate governance, a fixed effects model is constructed to test this relationship. Furthermore, this study analyzes the moderating effects of annual report text features, such as length, similarity, and readability, on the relationship between environmental information disclosure and firm value and the heterogeneous impact of firm ownership on this relationship. The main findings of this study are as follows: There is a positive correlation between the level of environmental information disclosure and firm value for Chinese listed companies in heavily polluting industries. Annual report text length and readability positively moderate the relationship between environmental information disclosure and firm value. Annual report text similarity negatively moderates the relationship between environmental information disclosure and firm value performance. Compared with state-owned enterprises, the impact of environmental information disclosure quality on the firm value of no-state-owned enterprises is more significant.

“Environmental disclosure greenwashing” and corporate value: The premium effect and premium devalue of environmental information

“…Roa varies from −0.349 to 0.208, reflecting operational challenges or success among companies. The data characteristics of other variables align with existing literature (Cai et al, 2023; Du & Yu, 2021).…”

“…Within the institutional theory framework (DiMaggio & Powell, 1983), corporate behavior is influenced not just by economic and market forces, but more profoundly by social cultural norms and values (Cai et al, 2023; Wang & Shao, 2023). This is often framed as a “social contract” (Williamson, 1979), wherein companies seek to gain or maintain legitimacy by adhering to industry standards or emulating successful practices (Alsahlawi et al, 2021).…”

A Sustainability Reporting Issue: A Comparative Review Between Indonesia and Nordic Country

“…Therefore, the leaders responsible for the company reporting process must adhere to clear language principles. Consistent with these findings, the length and comprehensibility of annual report texts can positively impact the relationship between Environmental Information Disclosure and firm value (Cai et al, 2023). In addition to the low readability levels of sustainability reports (SR) from listed companies in Indonesia, a strong relationship was found between environmental sustainability reporting and ecological sustainability management despite their differences (Agung et al, 2023).…”

Pengaruh Akuntansi Hijau Dan Kinerja Karbon Terhadap Kinerja Perusahaan Dengan Karakteristik Laporan Tahunan Sebagai Variabel Moderasi

“…Keefektifan komunikasi bergantung pada kemampuan pesan yang diterima oleh pembaca untuk menangkap dan menginterpretasikannya sesuai dengan maksud pembuat laporan tahunan. Teks laporan tahunan yang lebih banyak menceritakan lebih banyak informasi yang diberikan kepada stakeholders, sedangkan penurunan besaran teks menunjukkan lebih sedikit informasi yang diungkapkan (Cai et al, 2023).…”

“…Penelitian (Cai et al, 2023) mengungkapkan bahwa karakteristik tekstual laporan tahunan memberikan pengaruh positif pada hubungan pemaparan biaya lingkungan dengan nilai perusahaan. Selain memiliki tujuan untuk mendapatkan laba maksimal, perusahaan juga perlu menjaga keberlangsungan usaha dengan melakukan serangkaian kegiatan termasuk dengan melakukan keterbukaan informasi terhadap para pemangku kepentingan.…”