We investigate the association between accounting conservatism and environmental performance in China’s setting. Firms with better accounting information quality are found to reduce their environmental engagement. The result supports the resource dependent theory that executives strategically use accounting conservatism as a substitute for environmental commitment due to its long investment scale and possible low economic return in a short run.
The results remain robust after addressing endogeneity concerns using the IV 2SLS estimations, controlling for multiple fixed effects, using the DID method and utilizing alternative environmental measurements. We further find that the increased short-term financing and reduced attention from analysts due to providing conservative financial reporting are the two mechanisms that explain the negative relationship between accounting soundness and environmental performance. In addition, political connections and the level of policy
constraints that firms are subject to reshape the relationship between accounting conservatism and corporate environmental performance. The negative relationship is weakened in firms with executives currenting hold a government-nominated position, and firms facing tougher policy constraints. In addition, internal and external pressures, such as financing constraints and industry competition, also moderate the substitution effect of accounting conservatism. Our results suggest that firms under pressure need to make more efforts to satisfy powerful stakeholders.
Our study has important policy implications. Our results highlight that adopting accounting conservatism can function as an efficient mechanism that affects corporate environmental commitment. Particularly, we call for attention that policy makers need to consider how to promote the concept of eco-friendly corporations to firms that have catered for stakeholders with conservative accounting reporting.
Aguilera‐Caracuel, J., & Guerrero‐Villegas, J. (2018). How corporate social responsibility helps MNEs to improve their reputation. The moderating effects of geographical diversification and operating in developing regions. Corporate Social Responsibility and Environmental Management, 25(4), 355-372.
Aier, J. K., Chen, L., & Pevzner, M. (2014). Debtholders’ demand for conservatism: Evidence from changes in directors’fiduciary duties. Journal of Accounting Research, 52(5), 993–1027.
Akbar, A., Jiang, X., Qureshi, M. A., & Akbar, M. (2021). Does corporate environmental investment impede financial performance of Chinese enterprises? The moderating role of financial constraints. Environmental Science and Pollution Research, 28(41), 58007- 58017.
Allen, F., Qian, J., & Qian, M. (2005). Law, finance, and economic growth in China. Journal of Financial Economics, 77(1), 57-116.
Anagnostopoulou, S. C., Tsekrekos, A. E., & Voulgaris, G. (2021). Accounting conservatism and corporate social responsibility. The British Accounting Review.
Aronson, E., Wilson, T. D., & Akert, R. M. (2005). Social psychology (5th ed.). Prentice Hall.
Bai, G. (2013). How do board size and occupational background of directors influence social performance in for‐profit and non‐profitorganizations? Evidence from California hospitals. Journal of Business Ethics, 118(1), 171–187.
Ball, R. (2001). Infrastructure requirements for an economically efficient system of public financial reporting and disclosure. Brookings-Wharton papers on financial services, 2001(1), 127-169.
Basu, S. (1997). The conservatism principle and the asymmetric timeliness of earnings. Journal of Accounting and Economics, 24(1), 3-37.
Biddle, G. C., Ma, M. L., & Song, F. M. (2022). Accounting conservatism and bankruptcy risk.
Journal of Accounting, Auditing and Finance, 37(2), 295-323.
Buchanan, B., Cao, C. X., & Chen, C. (2018). Corporate social responsibility, firm value, and influential institutional ownership. Journal of Corporate Finance, 52, 73-95.
Busch, T., & Friede, G. (2018). The robustness of the corporate social and financial performance relation: A second‐order meta‐analysis. Corporate Social Responsibility and Environmental Management, 25(4), 583-608.
Cai, L., Cui, J., & Jo, H. (2016). Corporate environmental responsibility and firm risk. Journal of Business Ethics, 139(3), 563-594.
Casciaro, T., & Piskorski, M. J. (2005). Power imbalance, mutual dependence, and constraint absorption: A closer look at resource dependence theory. Administrative Science Quarterly, 50(2), 167-199.
Chang, K., Wan, Q., Lou, Q., Chen, Y., & Wang, W. (2020). Green fiscal policy and firms’
investment efficiency: New insights into firm-level panel data from the renewable energy industry in China. Renewable Energy, 151, 589-597.
Chen, J., Cumming, D., & Hou, W. (2016). Does the external monitoring effect of financial analysts deter corporate fraud in China? Journal of Business Ethics, 134(4), 727–742.
Cho, S-Y., Kang, P. K., Lee, C., & Park, C. (2020) Financial reporting conservatism and voluntary CSR disclosure. Accounting Horizons. 34(2), 63-82.
Colwell, S. R., & Joshi, A. W. (2013). Corporate ecological responsiveness: Antecedent effects of institutional pressure and top management commitment and their impact on organizational performance. Business Strategy and the Environment, 22(2), 73-91.
Crawford, S. S., Roulstone, D. T., & So, E. C. (2012). Analyst initiations of coverage and stock return synchronicity. The Accounting Review, 87(5), 1527-1553.
Cull, R., Li, W., Sun, B., & Xu, L. C. (2015). Government connections and financial constraints:
Evidence from a large representative sample of Chinese firms. Journal of Corporate Finance, 32, 271-294.
Davis, G. F., & Cobb, J. (2010). Resource dependence theory: Past and future. Research in the Sociology of Organizations, 28 21-42.
Eaton, S. (2013). Political economy of the advancing state: The case of China's airlines reform.
The China Journal, (69), 64-86.
Fee, C. E., Hadlock, C. J., & Pierce, J. R. (2009). Investment, financing constraints, and internal capital markets: Evidence from the advertising expenditures of multinational firms. The Review of Financial Studies, 22(6), 2361-2392.
Filbeck, G., & Gorman, R. F. (2004). The relationship between the environmental and financial performance of public utilities. Environmental and Resource Economics, 29, 137–157.
Flammer, C. (2015). Does corporate social responsibility lead to superior financial performance? A regression discontinuity approach. Management Science, 61(11), 2549–2568.
Gallagher, K. S. (2006). Limits to leapfrogging in energy technologies? Evidence from the Chinese automobile industry. Energy policy, 34(4), 383-394.
García Lara, J. M., García Osma, B., & Penalva, F. (2009). Accounting conservatism and corporate governance. Review of Accounting Studies, 14(1), 161-201.
García Lara, J. M., García Osma, B., & Penalva, F. (2011). Conditional conservatism and cost of equity. Review of Accounting Studies, 16 (2), 247–71.
García Lara, J. M., García Osma, B., & Penalva, F. (2016). Accounting conservatism and firm investment efficiency. Journal of Accounting and Economics, 61(1), 221-238.
Guay, W., & Verrecchia, R. (2006). Discussion of an economic framework for conservative accounting and Bushman and Piotroski. Journal of Accounting and Economics, 42(1), 149-165.
Guo, J., Huang, P., & Zhang, Y. (2020). Accounting conservatism and corporate social responsibility. Advances in Accounting, 51, 100501.
Gwartney, J., & Lawson, R. (2009). Economic freedom of the world: 2009 annual report.
Hadlock, C. J., & Pierce, J. R. (2010). New evidence on measuring financial constraints:
Moving beyond the KZ index. The Review of Financial Studies, 23(5), 1909-1940.
Hillman, A. J. (2005). Politicians on the board of directors: Do connections affect the bottom line? Journal of Management, 31(3), 464-481.
Hillman, A. J., Withers, M. C., & Collins, B. J. (2009). Resource dependence theory: A review.
Journal of Management, 35(6), 1404-1427.
Hillman, A. J., Zardkoohi, A., & Bierman, L. (1999). Corporate political strategies and firm performance: indications of firm‐specific benefits from personal service in the US government. Strategic Management Journal, 20(1), 67-81.
Hong, H., & Kacperczyk, M. (2009). The price of sin: The effects of social norms on markets.
Journal of Financial Economics, 93(1), 15-36.
Horv´athov´a, E. (2012). The impact of environmental performance on firm performance:
Short-term costs and long-term benefits? Ecological Economics, 84(12), 91–97.
Hu, J., Wang, S., & Xie, F. (2018). Environmental responsibility, market valuation, and firm characteristics: Evidence from China. Corporate Social Responsibility and Environmental Management, 25(6), 1376-1387.
Jeucken, M., & Bouma, J. J. (2017). The changing environment of banks. In Sustainable banking. Routledge, 24-38.
Jung, J., Herbohn, K., & Clarkson, P. (2018). Carbon risk, carbon risk awareness and the cost of debt financing. Journal of Business Ethics, 150(4), 1151-1171.
Khan, M., & Watts, R. L. (2009). Estimation and empirical properties of a firm-year measure of accounting conservatism. Journal of Accounting and Economics, 48(2–3), 132-150.
Khan, N., Akbar, M., & Akbar, A. (2016). Does an optimal working capital exist? The role of financial constraints. Research Journal of Finance and Accounting, 7(9), 131–136.
King, A. A., & Lenox, M. J. (2001). Does it really pay to be green? Anempirical study of firm environmental and financial performance. Journal of Industrial Ecology, 5(1), 105–
Kim, Y., Park, M. S., & Wier, B. (2012). Is earnings quality associated with corporate social responsibility? The Accounting Review, 87(3), 761-796.
Kim, Y., Li, S., Pan, C., & Zuo, L. (2013). The role of accounting conservatism in the equity market: Evidence from seasoned equity offerings. The Accounting Review, 88(4), 1327- 1356.
Kim, J.-B., & Zhang, L. (2016). Accounting conservatism and stock price crash risk: Firm- level evidence. Contemporary Accounting Research, 33(1), 412-441.
Kong, D., Liu, S., & Dai, Y. (2014). Environmental policy, company environment protection, and stock market performance: Evidence from China. Corporate Social Responsibility and Environmental Management, 21(2), 100-112.
Langberg, N., & Sivaramakrishnan, K. (2008). Voluntary disclosures and information production by analysts. Journal of Accounting and Economics, 46, 78-100.
LaFond, R., & Watts, R. L. (2008). The information role of conservatism. The Accounting Review, 83(2), 447–478.
Li, H., Meng, L., Wang, Q., & Zhou, L. A. (2008). Political connections, financing and firm performance: Evidence from Chinese private firms. Journal of Development Economics, 87(2), 283-299.
Li, M. (2005). Different concepts and measurement models of environmental cost.
Contemporary Economic Management, 5, 76–81.
Li, S., Song, X., & Wu, H. (2015). Political connection, ownership structure, and corporate philanthropy in China: A strategic-political perspective. Journal of Business Ethics, 129(2), 399-411.
Li, X. (2015). Accounting conservatism and the cost of capital: An international analysis.
Journal of Business Finance & Accounting, 42(5-6), 555-582.
Li, W., & Zhang, R. (2010). Corporate social responsibility, ownership structure, and political interference: Evidence from China. Journal of Business Ethics, 96(4), 631-645.
Li, Z., Wang, P., & Wu, T. (2021). Do foreign institutional investors drive corporate social responsibility? Evidence from listed firms in China. Journal of Business Finance and Accounting, 48(1-2), 338-373.
Liu, Y., Xi, B., & Wang, G. (2021). The impact of corporate environmental responsibility on financial performance—based on Chinese listed companies. Environmental Science and Pollution Research, 28(7), 7840.
Luo, X., & Bhattacharya, C. B. (2006). Corporate social responsibility, customer satisfaction, and market value. Journal of Marketing. 70, 1-18.
Ma, Y., Zhang, Q., & Yin, H. (2020). Environmental management and labor productivity: The moderating role of quality management. Journal of Environmental Management, 255, 109795.
Marquis, C., & Qian, C. (2014). Corporate social responsibility reporting in China: Symbol or substance? Organization Science, 25(1), 127–148.
Matsumoto, A., & Szidarovszky, F. (2020). Dynamic models of pollution penalties and rewards with time delays. Abstract and Applied Analysis (Vol. 2020).
Mora, A., & Walker, M. (2015). The implications of research on accounting conservatism for accounting standard setting. Accounting and Business Research, 45(5), 620-650.
Orlitzky, M., Schmidt, F. L., & Rynes, S. L. (2003). Corporate social and financial performance:
A meta-analysis. Organization studies, 24(3), 403-441.
Ortega, D. L., Wang, H. H., Olynk, N. J., Wu, L., & Bai, J. (2012). Chinese consumers' demand for food safety attributes: A push for government and industry regulations. American Journal of Agricultural Economics, 94(2), 489-495.
Pan, Y., & Zhao, R. (2021). Does mandatory disclosure of CSR reports affect accounting conservatism? Evidence from China. Emerging Markets Finance and Trade, 1-13.
Pfeffer, J., & Salancik, G. R. (1978). A resource dependence perspective. In Intercorporate relations. The structural analysis of business. Cambridge: Cambridge University Press.
Pfeffer, J., & Salancik, G. R. (2003). The external control of organizations: A resource dependence perspective. Stanford University Press.
Piotroski, J. D., & Roulstone, D. T. (2004). The influence of analysts, institutional investors, and insiders on the incorporation of market, industry, and firm‐specific information into stock prices. The Accounting Review, 79(4), 1119-1151.
Porter, M. E., & Kramer, M. R. (2011). Creating shared value: How to reinvent capitalism—
And unleash a wave of innovation and growth (pp. 2–17). Harvard Business Review, 523-542.
Qiang, X. (2007). The Effects of contracting, litigation, regulation, and tax costs on conditional and unconditional conservatism: Cross-sectional evidence at the firm level. The Accounting Review, 82(3), 759-796.
Rassier, D. G., & Earnhart, D. (2010). Short run and long run implications of environmental regulation on financial performance. Contemporary Economic Policy, 29(3), 357–373.
Ruch, G. W., & Taylor, G. (2015). Accounting conservatism: A review of the literature.
Journal of Accounting Literature, 34, 17-38.
Ruf, B. M., Muralidhar, K., Brown, R. M., Janney, J. J., & Paul, K. (2001). An empirical investigation of the relationship between change in corporate social perfor mance and financial performance: a stakeholder theory perspective. Journal of Business Ethics, 32, 143-156.
Sarfraz, M., He, B., & Shah, S. G. M. (2020). Elucidating the effectiveness of cognitive CEO on corporate environmental performance: the mediating role of corporate innovation.
Environmental Science and Pollution Research, 27(36), 45938-45948.
Shahbaz, M., Nasreen, S., Abbas, F., & Anis, O. (2015). Does foreign direct investment impede environmental quality in high-, middle-, and low-income countries? Energy Economics, 51, 275-287.
Stock, J., & Yogo, M. (2005). Asymptotic distributions of instrumental variables statistics with many instruments (Vol. 6).
Swanson, D. L. (1999). Toward an integrative theory of business and society: A research strategy for corporate social performance. Academy of Management Review, 24(3), 506-521.
Tsendsuren, C., Yadav, P. L., Han, S. H., & Kim, H. (2021). Influence of product market competition and managerial competency on corporate environmental responsibility:
Evidence from the US. Journal of Cleaner Production, 304.
Vastola, V., Russo, A., & Vurro, C. (2017). Dealing with cultural differences in environmental management: Exploring the CEP-CFP relationship. Ecological Economics, 134, 267- 275.
Watts, R. L. (2003a). Conservatism in accounting part I: Explanations and implications.
Accounting Horizons, 17(3), 207–221.
Watts, R. L. (2003b). Conservatism in accounting part II: Evidence and research opportunities.
Accounting Horizons, 17(3), 287–301.
Watts, R. & Zimmerman, J. (1986). Positive Accounting Theory. Prentice-Hall.
Wang, B. Y., Duan, M., & Liu, G. (2021). Does the power gap between a chairman and CEO matter? Evidence from corporate debt financing in China. Pacific-Basin Finance Journal, 65, 101495.
Wang, D., Du, F., & Marquis, C. (2019). Defending Mao’s dream: How politicians’ ideological imprinting affects firms’ political appointment in China. Academy of Management Journal, 62(4), 1111-1136.
Wei, J. T. (2021). Financial reporting material misstatements, earnings conservatism and managerial replacement decisions. International Journal of Business and Economic Sciences Applied Research, 14(1), 7-21.
Whited, T. M., & Wu, G. (2006). Financial constraints risk. The Review of Financial Studies, 19(2), 531-559.
Wu, H., Hao, Y., & Ren, S. (2020). How do environmental regulation and environmental decentralization affect green total factor energy efficiency: Evidence from China.
Energy Economics, 91, 104880.
Xu, F., Yang, M., Li, Q., & Yang, X. (2020). Long‐term economic consequences of corporate environmental responsibility: Evidence from heavily polluting listed companies in China. Business Strategy and the Environment, 29(6), 2251-2264.
Yadav, P. L., Han, S. H., & Rho, J. J. (2016). Impact of environmental performance on firm value for sustainable investment: evidence from large US firms. Business Strategy and the Environment, 25, 402-420.
Zhang, J. (2008). The contracting benefits of accounting conservatism to lenders and borrowers.
Journal of Accounting and Economics, 45(1), 27-54.
Zhang, J., Marquis, C., & Qiao, K. (2016). Do political connections buffer firms from or bind firms to the government? A study of corporate charitable donations of Chinese firms.
Organization Science, 27(5), 1307-1324.
Zhang, C., Liu, Q., Ge, G., Hao, Y., & Hao, H. (2021). The impact of government intervention on corporate environmental performance: Evidence from China's national civilized city award. Finance Research Letters, 39, 101624.
Zhou, G., Sun, Y., Luo, S., & Liao, J. (2021). Corporate social responsibility and bank financial performance in China: The moderating role of green credit. Energy Economics, 97, 105190.
Appendix 1. Variable description
ER Industry-year adjusted Hexun environmental responsibility score. Following Li et al. (2021), it is calculated as Hexun environmental responsibility score minus its mean value for all firms in the same industry in a year. The higher the score is, the higher the firm’s environmental performance.
Hexun ER Raw data of Hexun environmental performance score, ranged from 0 to 30. The higher the score is, the higher the firm’s environmental performance.
Disclosure Environmental information disclosure score (ranged from 0 to 11). The higher the score, the higher environmental disclosing quality.
CScore Accounting conservatism measure. A higher CScore indicates more conservative accounting activities.
M/B Ratio The ratio of market value to its book value of equity.
Sales Growth Change in sales between years t and t-1.
LEV Total liabilities scaled by total assets.
Size The natural logarithm of total assets.
Board Size Thenatural logarithm of the total number of directors on the board.
Board Independence The proportion of independent directors to the total number of directors on the board.
Big4 A dummy variable equals one if the auditor of the firm is one of international ‘Big4’ audit firms, and zero otherwise.
Top1 The largest shareholding ratio.
SOE A dummy variable equals one if the ultimate controller of a firm is a government agency or a state-owned enterprise, and zero otherwise.
R&D/Sales R&D expenses scaled by total sales.
ROA Return on assets, calculated as net profit after tax/total assets.
GDP Growth Rate The per capita GDP growth rate of the province where the firm is located.
Age Age of firm, measured as number of years since listing.
InvestmentCycle Proxy of a firm's investment-cycle length, calculated as depreciation divided by lagged total assets.
EI The natural logarithm of corporate environmental investment plus one.
Cost/Sales Industry-year adjusted corporate environmental protection and pollution treatment expenses divided by sales and times 1000.
Ascribed bureaucratic connection
A dummy variable equals one when the chairman has previous government experience.
Achieved political connections
A dummy variable equals one when the chairman is appointed to state organs such as National People’s Congress, Local People’s Congress, Chinese People’s Political Consultative Conference, or Local People’s Political Consultative Conference.
HHI The Herfindahl-Hirschman index that proxies the industry concentration, calculated as the sum of the squares of market shares of all firms in a particular market. The lower the index, the higher the competition in the industry sector.
CR4 The sum of the market share (revenue) of the top four largest
firms in an industry. The smaller the index, the fiercer the competition.
Analyst Attention The natural logarithm of the number of analysts (teams) that cover a firm in a year.
Report Attention The natural logarithm of the number of analyst research reports about a firm in a year.
Debt/TA The ratio of short-term debts to total assets.
WW Following Whited & Wu (2006), the WW index is calculated as:
WW = (0.091*CF) – (0.062*DIVPOS) + (0.021*TLTD) – (0.044*LNTA) +(0.102*ISG) – (0.035*SG)
where CF is ratio of cash flow divided by total assets; DIVPOS is a dummy variable equals to one if the firm pays dividend, and otherwise zero; TLTD is long-term debt to total assets; LNTA is the natural logarithm of total assets; ISG is an industry's average sales growth; and SG is a firm’s sales growth. A higher value of the WW index implies a greater level of financial constraints.
FC Following Fee et al. (2009), the FC index is calculated as:
P(𝑄𝑈𝐹𝐶 = 1 or 0|𝑍𝑖,𝑡) = 𝑒𝑍𝑖,𝑡
1+𝑒𝑍𝑖,𝑡 𝑍𝑖,𝑡= 𝛼0+ 𝛼1𝑆𝑖𝑧𝑒𝑖,𝑡+ 𝛼2𝐿𝑒𝑣𝑖,𝑡+ 𝛼3(𝐶𝑎𝑠ℎ𝐷𝑖𝑣
𝑇𝑎 )𝑖,𝑡+ 𝛼4𝑀𝐵𝑖,𝑡+ 𝛼5(𝑁𝑊𝐶
𝑇𝑎 )𝑖,𝑡+ 𝛼6(𝐸𝐵𝐼𝑇
𝑇𝑎 )𝑖,𝑡 where Size is the natural logarithm of total asset; Lev is total liabilities/total assets; CashDiv is cash dividends paid by a firm in a year; MB is a firm’s market value/book value; NWC is net working capital=working capital - monetary funds - short-term investments; EBIT is earnings before interest and tax.
absSA Absolute values of the SA index (absSA). Following Hadlock &
Pierce (2010), the SA index is calculated as:
𝑆𝐴 = −0.737*Size+0.043*𝑆𝑖𝑧𝑒2-0.040Age where Size is the natural logarithm of total asset; Age is the operating year of the firm. A higher absolute value of the SA index implies a greater level of financial constraints.
Keypolluter A dummy variable equals to one if the firm is identified as a key-polluter, and zero otherwise.
40 Appendix 2. Correlation matrix
This table reports the correlation coefficients between key variables. Definitions of variables are in Appendix 1. The superscripts *, **, and *** indicate significance at the 10%, 5%, and 1% levels, respectively.
1 2 3 4 5 6 7 8 9 10 11 12
1 CScore 1.000
2 Top1 -0.064*** 1.000
3 Board Size -0.065*** 0.020** 1.000
4 Board Independence -0.006 0.040*** -0.463*** 1.000
5 M/B ratio 0.121*** -0.089*** -0.197*** 0.062*** 1.000
6 Sales Growth 0.004 -0.004 -0.024*** -0.002 0.050*** 1.000
7 R&D/Sales 0.003 -0.094*** -0.049*** 0.044*** 0.149*** -0.007 1.000
8 ROA -0.038*** 0.098*** -0.015* -0.020** 0.287*** 0.173*** 0.009 1.000
9 Big4 -0.068*** 0.125*** 0.105*** 0.020** -0.114*** -0.034*** -0.023** 0.033*** 1.000
10 LEV -0.039*** 0.076*** 0.168*** -0.017* -0.487*** 0.041*** -0.129*** -0.393*** 0.105*** 1.000
11 Size -0.222*** 0.219*** 0.277*** 0.011 -0.533*** 0.051*** -0.061*** -0.023** 0.331*** 0.521*** 1.000
12 GDP Growth Rate 0.029*** -0.012 0.062*** -0.028*** -0.079*** 0.002 -0.054*** -0.015 -0.076*** 0.063*** -0.136*** 1.000
Appendix 3. Dimensions Indicator name I1: Legal consciousness
1. Whether a firm discloses environmental protection concept, environmental policy, environmental management organization structure, circular economy development mode, green development.
2. Whether a firm discloses a series of management systems, such as relevant environmental management systems, systems, regulations and responsibilities, formulated by the firm.
3. Whether a firm is subject to environmental violations, environmental petition cases or sudden environmental accidents.
I2: Social evaluation
1. Whether a firm received any environmental awards.
2. Whether a firm discloses special environmental protection activities, environmental protection and other social public welfare activities that the firm participates in.
3. Whether a firm discloses the establishment of an emergency mechanism for major environmental emergencies, the emergency measures taken, and the treatment of pollutants.
I3: Eco-friendly production
1. Whether a firm adopts a clean production.
2. Whether a firm discloses the implementation of the "three simultaneous" system.
3. Whether a firm discloses the establishment of an emergency mechanism for major environmental emergencies, the emergency measures taken, and the treatment of pollutants.
I4: Green management
1. Whether a firm has an ISO 14001 certification.
2. Whether a firm has an ISO 9001 certification.
Table 1. Descriptive statistics
Panel A shows the summary statistics of the main variables used in this study. Panel B shows the sample distribution by industry. Industry classification is based on Industry Classification and Code of China's National Economy (GB/4754-2011). Hexun ER denotes Hexun environmental responsibility score.
Disclosure denotesenvironmental information disclosure score. Definition of variables is reported in Appendix 1.
Panel A Summary statistics
Variable N Mean Std. Dev. Min Max
Hexun ER 12,148 1.998 5.307 0.000 30.000
Disclosure 12,148 1.510 1.902 0.000 9.000
CScore 12,148 -0.001 0.435 -1.974 1.975
M/B 12,148 2.098 1.776 0.200 9.250
Sales Growth 12,148 0.194 0.443 -0.510 2.789
R&D/Sales 12,148 0.004 0.014 0.000 0.087
ROA 12,148 0.040 0.048 -0.131 0.184
LEV 12,148 0.435 0.211 0.053 0.888
Size 12,148 22.177 1.238 19.862 25.844
Board Size 12,148 8.744 1.706 5.000 15.000
Board Independence 12,148 0.372 0.052 0.333 0.571
Big4 12,148 0.056 0.229 0.000 1.000
Top1 12,148 0.353 0.150 0.089 0.748
SOE 12,148 0.421 0.494 0.000 1.000
GDP Growth 12,148 0.078 0.020 0.033 0.146
Analyst Attention 9,520 1.781 1.068 0.000 3.714
Report Attention 9,558 2.298 1.292 0.000 4.682
Debt/TA 11,580 0.101 0.106 0.000 0.558
connection 12,122 0.058 0.234 0.000 1.000
connections 12,070 0.099 0.299 0.000 1.000
WW 12,148 -1.017 0.070 -1.217 -0.854
FC 12,148 0.447 0.291 0 0.992
absSA 12,148 3.748 0.236 2.146 4.718
Keypolluter 12,148 0.088 0.284 0.000 1.000
HHI 12,148 0.057 0.088 0.008 0.453
CR4 12,148 0.296 0.194 0.109 0.892
EI 756 6.082 2.789 0.412 11.535
Cost/Sales 1,356 0.000 2.113 -5.368 13.004
Panel B Sample industry distribution
Industry N Hexun ER Disclosure
Mining Industry 222 5.581 3.090
Transportation, Warehousing and Postal Services 427 4.165 1.555
Construction Industry 309 3.231 1.848
Electricity, Heat, Gas and Water Production and
Supply 374 2.612 1.385
Manufacturing Industry 8,101 1.954 1.706
Public Administration, Social Security and Social
Organization 306 1.677 0.627
Hotels and Catering Services 16 1.656 1.500
Whole-sales and Retail Trade 671 1.607 0.718
Water Conservancy, Environment and Public 87 1.563 1.494