Abstract
In recent years, the quality of carbon emission disclosures has become a central area of concern for different stakeholders of companies. Specifically, stakeholders of state-owned enterprises (SOEs) want these companies to legitimize their actions regarding carbon emissions reductions reporting. The current study aims to explore the impact of carbon emission trading system participation and the level of internal control on the quality of carbon emission disclosures. Using a sample of Chinese state-owned electricity companies from 2012 to 2018 and employing the difference-in-differences (DID) method, we find a positive impact of the carbon emission trading system participation on the quality of carbon emission disclosures, which suggests that the state-owned electricity companies’ participation in the carbon emission trading system leads to the higher quality of carbon emission disclosures. Likewise, we find a positive relationship between the level of internal control and the quality of carbon emission disclosures, which suggests that the state-owned electricity companies with stronger internal control provide the higher quality of carbon emission disclosures. In addition, we find that the findings are only significant in the case of central SOEs as compared to local SOEs. Our findings contribute to the practical, policy, and research implications as the quality of carbon disclosures is the primary concern from a variety of stakeholders.
Highlights
Carbon emission disclosures are required by different stakeholders such as the government, investors, regulators, and the general public of the companies to legitimize their environmental performance due to global warming
We find a positive relationship between the level of internal control and quality of carbon emission disclosures, which suggests that the state-owned electricity companies with stronger internal control provide the higher quality of carbon emission disclosures
In the period of 2012–2018, the extent of carbon emission disclosures of Chinese state-owned electricity companies was improved as compared to the greenhouse gas (GHG) disclosures from 2000–2009 of eight Chinese electricity companies as shown in Momin et al (2017) [7], our findings indicate that the quality of carbon emission disclosures is still very low for the Chinese state-owned electricity companies
Summary
Carbon emission disclosures are required by different stakeholders such as the government, investors, regulators, and the general public of the companies to legitimize their environmental performance due to global warming. Our study aims to explore the influence of CN-ETS participation on the quality of carbon disclosures in Chinese state-owned electricity companies. Our study wants to explore the impact of the level of internal control on the quality of carbon information disclosures in Chinese state-owned electricity companies. There is no evidence regarding the impact of the level of internal control on the quality of carbon information disclosures in Chinese state-owned electricity companies. We have investigated the impact of CN-ETS participation and the level of internal control on the quality of carbon disclosures in Chinese state-owned electricity companies. Our findings have implications for managers and regulators of Chinese state-owned electricity companies to legitimize their actions by providing more quality carbon emission disclosures. While the fourth section presents the results and discussion, and the final section concludes the study
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