Environmental Specificity Information Disclosure of Heavily Polluting Companies and Stock Price Crash Risk

Mei Li

doi:10.54097/7r376s25

Authors

Mei Li

DOI:

https://doi.org/10.54097/7r376s25

Keywords:

Environmental Specificity Information; Stock Price Crash Risk; information transparency.

Abstract

Using Natural Language Processing (NLP) techniques, this study empirically examines the impact of environmental specificity information disclosure on stock price crash risk, employing a sample of A-share listed companies in heavily polluting industries from 2013 to 2022. The study finds that environmental specificity information disclosure by heavily polluting companies significantly mitigates future stock price crash risk. Mechanism tests reveal that such disclosure reduces crash risk through pathway: improving corporate reputation. Heterogeneity analysis demonstrates that the inhibitory effect of environmental specificity information on crash risk is particularly prominent among firms characterized by low analyst coverage and weak government environmental regulation. This research verifies that environmental specificity information disclosure enhances information efficiency in heavily polluting enterprises, thereby providing empirical evidence for improving capital market resource allocation efficiency and optimizing environmental information disclosure systems.

Downloads

Download data is not yet available.

References

[1] YE Yanyi, GAO Haoyue, YANG Xiaoguang. The Risk of Stock Price Surging: An Empirical Study Based on China's Stock Market. Chinese Journal of Management Science, 2019, 27(7): 11-22.

[2] HOPE O, HU D, LU H. The benefits of specific risk-factor disclosures. Review of Accounting Studies,2016,21(4):1005-1045.

[3] LI Sihai, LI Zhen. Research on the Signaling Effect of Characteristic Information Content in Corporate Social Responsibility Reports: Analysis Based on Natural Language Processing Technology. China Industrial Economics, 2023(1): 114-131.

[4] HUANG Jun, ZHOU Chunna. Equity Structure, Management Behavior and Their Impact on Environmental Information Disclosure: Empirical Evidence from Heavily Polluting Industries in Shanghai Stock Market. China Soft Science, 2012(1): 133-143.

[5] DUAN Cunru, WANG Linjie, ZHOU Xiaoxi, et al. Environmental Information Disclosure and Green Product Market Information Asymmetry: Mechanism and Empirical Test. Statistics & Information Forum, 2022(12): 66-77.

[6] ZHANG Z, SU Z, WANG K, et al. Corporate environmental information disclosure and stock price crash risk: Evidence from Chinese listed heavily polluting companies. Energy Economics, 2022, 112: 106116.

[7] LI Zhengda, LI Feng, ZHAO Yating. The Financing Effect of Environmental Information Disclosure: Evidence from Heavily Polluting Enterprises. Audit & Economy Research, 2024, 39(1): 117-127.

[8] MAMUN M. A, BALACHANDRAN B, DUONG H. N. Powerful CEOs and Stock Price Crash Risk. Journal of Corporate Finance,2020,62.

[9] XI Longsheng, WANG Yan. Corporate ESG Information Disclosure and Stock Price Crash Risk. Economic Problems, 2022(8): 57-64.

[10] LIU Huiqin, SHI Xianwang. Annual Report Text Readability and Stock Price Crash Risk. Journal of Investment Research, 2022, 41(7): 129-148.

[11] SONG Xinbei, CHEN Ying, LU Dong, et al. Information Environment, Incremental Information Disclosure of Listed Companies, and Capital Market Pricing Efficiency: Research Based on MD&A Text Similarity. Nankai Business Review, 2024(8): 1-26.

[12] JIN L, MYERS S C. R2 around the world: New theory and new tests. Journal of Financial Economics, 2006, 79(2): 257-292.

[13] HUTTON A P, MARCUS A, TEHRANIAN H. Opaque Financial Reports, R2 and Crash Risk. Journal of Financial Economics,2008,94(1):67-86.

[14] LI Xiaoqi, HU Yanglin, SHI Wei. Top-level Institutional Design of ESG Reporting in China: A Preliminary Study. Securities Market Herald, 2022(4): 35-44.

[15] TIETENBERG T, 1998. Disclosure Strategies for Pollution Control. Environmental and Resource Economics, 11(3): 587-602.

[16] BOIRAL O, 2013. Sustainability reports as simulacra? A counter-account of A and A+ GRI reports. Accounting, Auditing & Accountability Journal, 26(7): 1036-1071.

[17] CORMIER D, LEDOUX M, MAGNAN M, 2011. The informational contribution of social and environmental disclosures for investors. Management Decision, 49(8): 1276-1304.

[18] ROBINSON, S., and M. Eilert. The Role of Message Specificity in Corporate Social Responsibility Communication. Journal of Business Research,2018,90(C):260-268.

[19] PRESTON, L. E., and D. P. O’BANNON. The Corporate Social-financial Performance Relationship: A Typology and Analysis. Business and Society,1997,36(4):419-429.

[20] MORALES-RAYA M, MARTIN-TAPIA I, ORTIZ-DE-MANDOJANA N, 2018. To Be or to Seem: The Role of Environmental Practices in Corporate Environmental Reputation. Organization & Environment, 32: 108602661775315.

[21] WANG Zhongbing, JIN Xiaochao. Research on the Correlation Between Carbon Information Disclosure and Enterprise Value. Macroeconomics, 2013(1): 86-90.

[22] PAN Ailing, LIU Xin, QIU Jinlong, et al. Can Green Mergers and Acquisitions Under Media Pressure Promote Substantive Transformation of Heavily Polluting Enterprises?. China Industrial Economics, 2019(2): 174-192.

[23] BOZANIC Z, ROULSTONE D T, Van Buskirk A. Management earnings forecasts and other forward-looking statements. Journal of Accounting and Economics,2018,65(1):1-20.

[24] WU Xiaohui, GUO Xiaodong, QIAO Zheng. Institutional Investor Grouping and Stock Price Crash Risk. China Industrial Economics, 2019(2): 117-135.

[25] SHI Yong, XU Mingyuan, LIU Yongqi, et al. Audit Report Information Content and Stock Price Crash Risk. China Soft Science, 2023(11): 201-212.

[26] KIMJ B, WANG Z, ZHANG L.CEO overconfidence and stock price crash risk. Contemporary accounting research,2016,33(4):1720-1749.

[27] GUO Wenwei, HUANG Zicong, HE Jie. Confucian Culture and Corporate Climate Change Risk Disclosure: Text Analysis and Machine Learning. China Journal of Economics, 2024, 11(2): 170-204.

[28] LIU Jianqiu, YIN Guangying, WU Jinghua. Corporate Social Responsibility Report Tone and Asset Mispricing. Accounting Research, 2022(5): 131-145.

[29] HUANG Pingping, LI Sihai. Corporate Social Responsibility Report Tone and Stock Price Crash Risk. Audit & Economy Research, 2020, 35(1): 69-78.

[30] DANG C, FOERSTER S, LI Z (Frank), 2021. Analyst talent, information, and insider trading. Journal of Corporate Finance, 67: 101803.

[31] LIU Gang, TANG Yin, YIN Jianling. The Impact Mechanism of Corporate Social Responsibility on Performance from the Perspective of Analyst Attention: A Study Based on Machine Learning and Text Analysis. China Soft Science, 2024(2): 156-166.

[32] PORTER M E, LINDE V D. Towards a new conception of environment-competitiveness relationship. The Journal of Economic Perspectives,1995,9 (4):97-118.

[33] WILLIAMSON O E. The new institutional economics: Taking stock, looking ahead. Journal of Economic Literature, 2000, 38(3): 595-613.

[34] CHEN Shiyi, CHEN Dengke. Haze Pollution, Government Governance, and High-quality Economic Development. Economic Research Journal, 2018, 53(2): 20-34.