Corporate Environmental Information Disclosure and Stock Price Crash Risk: Evidence from Chinese listed heavily polluting companies

Abstract

Environmental performances have gained great prominence for firms in recent years. This paper examines the impact of corporate environmental information disclosure on the stock price crash risk based on a large sample of Chinese heavily polluting companies over the 2013-2019 period. We find that corporate environmental information disclosure reduces the stock price crash risk. The result holds after addressing potential concerns for endogeneity. Moreover, we analyze the mediating mechanisms and identify that operational transparency and investors' reactions work as mediators while information authenticity works as a suppressor. We also find that Internet attention strengthens the negative relation between environmental information disclosure and stock price crash risk. Our results demonstrate that corporate environmental disclosure plays a vital role in long-term sustainable development for heavily polluting companies.