Does environmental information disclosure promote or prohibit financialization of non-financial firms? Evidence from China

Abstract

This study investigates whether and how corporate environmental information disclosure influences financialization in non-financial companies. Using data from Chinese listed firms, we find that environmental information disclosure significantly reduces the financialization of nonfinancial firms. Based on signalling theory and resource constraint theory, additional analysis shows that environmental information disclosure boosts firms’ operating income and drives corporate research and development input, which inhibits corporate financialization. Furthermore, the heterogeneous results indicate that the impeding impact of environmental information disclosure is more pronounced for firms located in the eastern region and non-state-owned companies.