Carbon Information Disclosure Research Articles

Visualizing and Quantifying the Dynamics in the Effect of Carbon Information Disclosure on Corporate Value

Visualizing and Quantifying the Dynamics in the Effect of Carbon Information Disclosure on Corporate Value

Government Regulation, Executive Overconfidence, and Carbon Information Disclosure: Evidence From China.

Climate change has put countries around the world under great pressure to reduce greenhouse gas emissions. Chinese government has proposed that China will strive to peak carbon dioxide emissions before 2030 and achieve carbon neutrality before 2060. A low-carbon lifestyle is becoming a new trend in China. Therefore, the products of firms that actively respond to climate change are more popular for consumers in China. In the Internet era, the carbon information disclosed by firms has become an important way for consumers to understand the behavior of firms in responding to climate change. In the existing literature on the influencing factors of carbon information disclosure, the psychological factors of executives are seldom investigated. Using a sample of Chinese listed firms in low-carbon pilot provinces and cities during the period of 2015–2019, this study explores the influence of government regulation and executive overconfidence on the quality of carbon information disclosure. The results show that government regulation has a significantly positive impact on the quality of carbon information disclosure. The results also reveal that executive overconfidence negatively affects the quality of carbon information disclosure. Moreover, executive overconfidence negatively moderates the relationship between government regulation and the quality of carbon information disclosure. Our findings make a significant contribution to the role of executive’s psychological factors in firm’s behaviors and provide new insights and policy implications for government, firms, consumers, and other stakeholders.

Female Directors and Carbon Information Disclosure: Evidence from China

In recent years, natural disasters and public health events caused by global warming have occurred frequently around the world. It has become a global consensus to actively respond to climate change. Firms are the main source of greenhouse gas emissions. The disclosure of carbon information is one of the most important ways for firms to respond to climate change. The effect of female directors on carbon information disclosure is still unclear. Considering that China is the largest country in greenhouse gas emissions and the social status of females in China is different from western countries, this paper explores the effect of female directors on carbon information disclosure by firms in China. Based on the sample of listed Chinese firms in high carbon industries during the period of 2012–2017, our empirical results show that female directors have a positive association with carbon information disclosure. In addition, we find that the power, educational level, and financial background of female directors have positive impacts on firms’ carbon information disclosure. Our findings make a significant contribution to the ongoing debate on the role of female directors and provide new insights and policy implications for firms, regulators, and other stakeholders.

The value relevance of corporate voluntary carbon disclosure: Evidence from the United States and BRIC countries

Our study focuses on the value relevance of corporate voluntary carbon disclosure. Our sample includes firms from the United States (listed in the S&P 500) and firms from Brazil, Russia, India, and China that are targeted by the CDP. We examine whether the capital market rewards firms’ voluntary carbon disclosure. Voluntary carbon disclosure is measured as firms’ propensity to voluntarily disclose carbon information and the comprehensiveness and quality of their disclosure. We find that firms with greater carbon disclosure have higher firm value. Furthermore, the positive association between firm value and voluntary carbon disclosure is stronger in developing countries. We also find that large emitters with sufficient carbon disclosure experience a less negative valuation than firms with inadequate carbon disclosure. Furthermore, a subcomponent analysis suggests that the disclosure of specific types of climate risk and opportunity is rewarded by investors and can mitigate the valuation penalty of carbon emissions. These results have important implications for companies, investors, and regulators. Our analyses enhance understanding of the consequences of voluntary carbon reporting, which enriches the reporting of current financial information.

The Impact of Carbon Disclosure on Financial Performance under Low Carbon Constraints

In the context of low-carbon constrained development, in order to avoid the risk brought by climate change, more and more companies choose to disclose carbon information, respond to the national policy of carbon emission reduction and focus on the sustainable development of enterprises. This paper will investigate the impact of carbon disclosure on financial performance based on the 2011–2018 CDP report, taking the Fortune 500 companies as a sample. The study finds that for carbon-intensive industries, carbon disclosure cannot significantly contribute to the improvement of financial performance in the current period, but for carbon-non-intensive industries, carbon disclosure can significantly contribute to the improvement of financial performance in the current period, and the positive impact of carbon disclosure on financial performance in the current period can be extended to the next period. Finally, based on the findings of the empirical study, this paper puts forward policy recommendations for the construction of China’s carbon disclosure system.

Market incidence of carbon information disclosure in the oil and gas industry: the mediating role of financial analysts and governance

PurposeThis study aims to assess the informativeness of carbon emission data for the stock markets and the mediating role played by financial analysts and the quality of the governance on this issue.Design/methodology/approachRelying on structural equation modelling, the authors assess the relation between embedded CO2 disclosure or CO2 emissions disclosure and the stock market valuation (Tobin Q), considering the mediating roles played by financial analysts (external monitoring) and corporate governance (internal monitoring).FindingsResults based on a sample of North American firms in the oil and gas industry are the following. The disclosure of embedded CO2 is negatively associated with a firm’s market value, but this association is mediated by analyst following and corporate governance. The disclosure of yearly CO2 emissions is also negatively related to stock market value, while corporate governance mediates this negative impact, and analysts following does not. Considering that yearly CO2 emissions represent short-term environmental risks, whereas embedded CO2 represents long-term environmental risks, it appears important to consider embedded CO2 when studying the impact of carbon disclosure on firm value. The authors also show that a firm’s environmental performance (measured by Carbon Disclosure Project – CDP) is positively associated with two mediating variables (i.e. analyst following and corporate governance).Originality/valueThe study results suggest that CO2 emissions information is less relevant than embedded CO2 in attracting financial analysts when they are assessing a firm’s value because it represents short-term environmental risks, whereas embedded CO2 represents long-term environmental risks. Therefore, the authors consider important to include embedded CO2 when studying the impact of environmental disclosure on a firm’s value.

CEO Compensation, Incentive Alignment, and Carbon Transparency

ABSTRACT We examine whether chief executive officer compensation aligned with stakeholders' interests is associated with enhanced corporate carbon transparency. Using an international sample obtained from the CDP, we find that corporate carbon transparency—as measured by both the propensity to voluntarily disclose carbon information and the quality and comprehensiveness of the disclosure—is greater when managers' compensation contracts are better aligned with stakeholder interests. Further analyses indicate that this positive relationship is stronger in countries or regions with a code law legal system, with an inefficient rule of law, that show strong social norms toward climate change, that feature collectivist societies, and that have a long-term orientation. These findings indicate that the stakeholder agency problem of voluntary carbon disclosure can be addressed through executive incentives that are aligned with stakeholders' interests.

External financing demands, media attention and the impression management of carbon information disclosure

This study examined whether firms’ external financing demands affect the impression management of carbon information disclosure; we also considered the moderating role of media attention in this relationship. The sample consisted of firms in eight energy-intensive industries included in the State Council of China’s “Notice on the Pilot Work of Carbon Emission Trading.” The findings are as follows: (1) A positive correlation existed between external financing demand and the impression management of carbon information disclosure; that is, compared to firms without external financing demand, those with external financing demand had greater impression management of carbon information disclosure. (2) Media attention partially weakened the effect of external financing demand on the impression management of carbon information disclosure. These findings are shown to be robust. Further test indicated that, compared to state-owned enterprises (SOEs), the effect of external financing demand on the impression management of carbon information disclosure was more pronounced in non-SOEs. Our findings enrich the literature on carbon information disclosure. They also provide ideas for governments to formulate carbon information disclosure standards, for investors to effectively identify firm’s impression management of carbon information disclosure, and for firms to better carry out carbon management.

The Influence of Academic Independent Directors and Confucianism on Carbon Information Disclosure: Evidence from China

As global warming has received widespread attention, the disclosure of firms’ carbon information has been expected by increasing stakeholders. This study extends the previous literature on the determinants of firms’ carbon information disclosure by examining the influence of academic independent directors and Confucianism on the quality of carbon information disclosure. Using a sample of Chinese listed firms in the CSI 300 Index during the period of 2012–2018, our empirical results show that academic independent directors have a significantly positive association with the quality of carbon information disclosure. The results also reveal that Confucianism positively affects the quality of carbon information disclosure. Moreover, Confucianism positively moderates the relationship between academic independent directors and the quality of carbon information disclosure. The results imply that Confucianism, as an informal system, can promote the governance effect of academic independent directors on firms’ carbon information disclosure behaviour. Our findings offer shareholders, regulators, and other stakeholders an integrating perspective on motivating firms to disclose high quality carbon information.

Carbon Information Disclosure in The Network Environment

Facing global warming and environmental problems, enterprises should fulfill their environmental responsibilities in protecting the environment, reducing carbon emissions and improving environmental quality. With the development of computer network technology and the promotion of 5G technology, carbon information disclosure has become intuitive and individualized, which will, to a great extent, help enterprises disclose carbon information in a timelier manner. Based on the current situation of carbon information disclosure in the network environment, this paper studies and analyzes the problems with regard to carbon information disclosure in the network environment, so as to better satisfy the diversified demands of carbon information users in the network environment and provide assistance for decision makers.

Components of Countries’ Regulative Dimensions and Voluntary Carbon Disclosures

The previous literature has demonstrated that countries’ regulative contexts positively influence voluntary corporate carbon disclosures. However, little research has been conducted into the relationship between the different components of the regulative dimension of institutions and voluntary carbon disclosure. Drawing on the theoretical framework of New Institutional Sociology (NIS), this study examines the influence of the different components of the regulative context (rules; monitoring mechanisms and punishments; rewards) both on firms’ propensity to disclose carbon information and on the quality of disclosures. Based on a global sample of 2176 companies that participated in the 2015 Carbon Disclosure Project (CDP) climate report, this paper uses the Heckman two-stage approach in an attempt to model firms’ decisions as to whether to disclose carbon information, as well as the quality of said disclosures. The results show that the regulative components positively influence firms’ decisions to voluntarily disclose carbon data. They also show that the quality of disclosures is positively affected by climate-related rules and rewards, but that it is not influenced by monitoring mechanisms and punishments related to climate change. This paper is the first to take the step of addressing the components of the climate-related regulative pillar of institutions in the same regression setting.

Financial Attributes, Environmental Performance, and Environmental Disclosure in China.

Contest between the international or national enterprises stimulates the formation of innovative or improved products or of well-organized processes. Nevertheless, reliance on carbon-based materials and energy emission sources has been highlighted as a primary problem of the 21st century. The current study examines the influence of carbon disclosure information (CDI), media reporting and financial influence on state-owned enterprises (SOEs) and non-state-owned enterprises (NSOEs) by using Shenzhen and Shanghai’s heavy polluting listed industries’ dataset from 2014 to 2019. By applying different data approaches, the estimated results demonstrate that the CDI level is significantly negative related to SOE compared to NSOE. The estimated results explain that media’s positive reporting offsets the additional benefits to stakeholders. While media’s negative reporting negatively influences a firm’s competitive position, it mitigates the stock price and its social value. Our results suggest that external factors are encouraging for the financial values of stakeholders, along with those of enterprises.

The effect stakeholders have on voluntary carbon disclosure within Chinese business organizations

Based on the manually collected carbon information disclosure data for the Chinese listed companies from 2009 to 2015, this paper examines the influencing factors of carbon information disclosure from the stakeholders’ perspective. The results show that among external stakeholders, pressures from government and customers can improve the level of firm carbon information disclosure, but the effects of creditor, supplier and competitor on firm carbon information disclosure level are not significant. Among internal stakeholders, the major shareholders, institutional investors, and employees can improve the level of firm carbon information disclosure, but the effects of foreign investors (QFII) on carbon information disclosure are not significant. Among third-party stakeholders, environmental protection organizations and audit institutions can improve the level of firm carbon information disclosure. We hope that findings of this paper will provide guidance to the Chinese firms to develop carbon disclosure policies and encourage researchers to conduct future research on this subject.

The impact of the consistency of carbon performance and carbon information disclosure on enterprise value

This study applies representative and quantifiable indicators to measure carbon performance and uses crawler technology to determine whether carbon information is disclosed in 2009-2017 manufacturing CSR reports to study the measure of the consistency of carbon performance and carbon information disclosure on enterprise value. The results show that the consistency of corporate carbon performance and carbon information disclosure has a more significant positive impact on corporate value and that this promotional effect is more obvious among non-state-owned enterprises and companies with high levels of corporate governance.

Overview of research on carbon information disclosure

Against the background of addressing global climate change and carbon emission reduction, corporate carbon information disclosure (CID) has become an important measure to achieve carbon emission reduction worldwide and a research hotspot closely investigated by the academia. This study provides a systematic overview of literature on CID, including its research trend, theoretical basis, disclosing features, influencing factors, and consequences. Results indicate that, first, CID has been increasing in recent years, but the content and quality of the disclosure still need to be improved. Second, the main influencing factors of CID include company features, corporate governance, environmental performance, institutional characteristics, and stakeholders. Third, the consequences of CID are based mainly on company performance, ecological environment, and investors’ decision-making. Lastly, most studies have confirmed the positive effect of CID on company performance and investors’ decision-making, but the nexus of environmental performance and corporate CID remains to be investigated. Several important future research directions are also proposed based on these results.

A carbon emission costing method based on carbon value flow analysis

Abstract Faced with increasingly strict carbon surveillance from carbon-related laws and regulations, it has become urgent for high-emission enterprises to find effective methods by which to reduce carbon emissions and control carbon emission costs. However, although carbon emission costs are closely related to the production process, current costing methods only pay more attention to the total cost amount rather than to the cost generation process. Therefore, this study aims to develop a carbon emission costing method based on carbon value flows analysis (CVFA) by tracing carbon element flow and accounting for carbon emission monetary value simultaneously. To verify the rationality and effectiveness of this method, this article also implements it in a case company. The results indicate that carbon emissions were reduced by 405,021.97 tons, and RMB 107,300,000 ($15,670,000) was saved through conducting optimized analysis. It is proved that the CVFA method is particularly suitable for process manufacturing enterprises. However, certain conditions are required to apply CVFA, such as the availability of compulsory carbon information disclosure regulations. Also, improving managers’ carbon resources investment decision-making capacity can reduce more carbon emissions and save more carbon emission costs.

Spatial Heterogeneity of Government Regulation, Spatial Distance and Enterprise Carbon Information Disclosure: An Analysis Based on the Heavy Pollution Industry in China.

Under the background of the construction of ecological civilization in China, since China has a vast amount of territory and large distances between cities, the intensity of environmental supervision in different regions may affect the enthusiasm of enterprises to disclose carbon information. Based on the listed companies of the Chinese heavy pollution industry from 2009 to 2014, using the content analysis method, the paper researches the influence of the spatial heterogeneity regarding government regulation and spatial distance on enterprise carbon information disclosure and puts forward some suggestions. The empirical results show that carbon information disclosure is significantly positively related with the spatial heterogeneity of government regulation. The spatial heterogeneity of government regulation is significantly positively associated to non-financial carbon information disclosure. The relationship between government supervision and financial carbon information disclosure is not significant. Spatial distance and carbon information disclosure are significantly positively related. There is also a significant positive correlation between spatial distance and financial carbon information disclosure. Further study finds that in public enterprises, the spatial heterogeneity of government regulation will promote carbon information disclosure, and the influence of spatial heterogeneity of government regulation on non-financial and financial carbon information disclosure both are significantly positively related. In non-public enterprises, spatial distance and carbon information disclosure are significantly positively related, and spatial distance and non-financial carbon information disclosure are significantly positively related as well.

The External Pressure, Internal Drive and Voluntary Carbon Disclosure in China

ABSTRACT The increasingly serious environmental problems, such as rising sea levels and heavy smog, have made environmental consciousness in society more urgent. The key issue is how to motivate firms to disclose environmental information. In this paper, we use data on 200 listed enterprises in China as a sample and research the factors that affect voluntary carbon disclosure. We found that local government regulatory pressure and social pressure have different levels of influence on carbon information disclosure of state-owned enterprises and non-state-owned enterprises; local government regulatory pressure have a greater impact on state-owned enterprises’ carbon information disclosure, while social pressures have a greater impact on non-state-owned enterprises. Finally, we make some suggestions aimed at promoting disclosure of carbon information.

External Pressure, Corporate Governance, and Voluntary Carbon Disclosure: Evidence from China

This paper uses manually collected data of carbon information disclosure for listed companies, from 2009 to 2015 in China, to measure corporate carbon information disclosure, and it explores the impact of external pressure and internal governance on carbon information disclosure through text analysis and a hierarchy analysis process. The results show that, firstly, the greater the external pressure is, the higher the level of carbon information disclosure will be; that is, when listed companies are state-owned enterprises or in heavy pollution industries, the level of carbon information disclosure is higher. Secondly, the higher the level of corporate governance is, the higher the level of carbon information disclosure will be; that is, when the board of directors is larger, the proportion of independent directors is higher, and the chairman and general manager positions are differentiated, the level of carbon information disclosure is higher. Furthermore, when listed companies are state-owned and in heavy pollution industries, the level of carbon information disclosure is higher; when the chairman and general manager are in the same position (lower governance level), the positive impact of government pressure on carbon disclosure is less significant, the positive impact of external pressure on carbon disclosure is less significant, and the positive interactive impact of government pressure and external pressure on carbon disclosure is less significant. The conclusions of this paper are still robust after Heckman two-stage regression, propensity score matching (PSM) analysis, sub-sample regression, and double clustering analysis.

Voluntary Carbon Transparency: A Substitute for or Complement to Financial Transparency?

ABSTRACT We analyze the relationship between financial transparency and carbon transparency based on the ethical and opportunistic perspectives. Our sample comprises 10,341 firm-year observations from firms in 55 countries or regions in the CDP (previously the Carbon Disclosure Project) during the period 2003–2015. We measure carbon transparency based on both managerial propensity to publicly disclose carbon information and the level and comprehensiveness of the voluntary carbon disclosure. We operationalize financial transparency based on firms' earnings management (EM). We find that our carbon transparency proxies are negatively associated with EM. These results are consistent with the ethical perspective, which suggests that carbon transparency complements financial transparency rather than substitutes for it. Furthermore, we find that the complementary relationship between carbon transparency and financial transparency is dependent on a country's stakeholder orientation, collectivism in the national culture, the presence of an emissions trading scheme, and regulatory governance.