Unpacking firm political dependence: how administrative hierarchical distance affects corporate environmental information disclosure

Abstract

This article explores the diverse response strategies concerning environmental information disclosure (EID) among firms affiliated to different political hierarchies. Drawing on resource dependence theory (RDT), we hypothesize a U-shaped relationship between a firm’s administration hierarchical distance (AHD) and its EID. The relationship is also contingent on the scope of dependence, as reflected in two resource-based components: (i) firms with or without political connections, and (ii) varying levels of corporate innovation capability. Using data from Chinese listed companies in polluting industries, we document that firms with medium AHD have the weakest EID, while firms with shorter or longer AHD exhibit higher EID to maintain institutional or gain competitive resource, respectively. This pattern is stronger for non-politically connected and low-innovation firms. Our research not only enriches RDT on corporate political strategies by unpacking firm political dependency, but also contributes to the emerging work on the pluralistic perspective on government.