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Quality or breadth? Environmental information disclosure, corporate financial performance and the role of analysts

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  • Nengzhi Yao
  • Zhe Ouyang
  • Qiaozhe Guo
  • Xiuyuan Gong

Abstract

Environmental information disclosure (EID) is an important part of environmental management practices, and it has become a reference for stakeholders to evaluate firms. To obtain support from stakeholders, such as analysts, firms can disclose information that indicates how good they perform in environmental protection, which we referred to as EID quality, and/or that covers multiple aspects of environmental protection, which we referred to as EID breadth. Given the importance of EID practices, this study examines whether and how these two dimensions of EID affect corporate financial performance (CFP). Analyzing a sample of publicly listed manufacturing firms from 2009 to 2019 in China, we find that EID breadth has a positive relationship with CFP, while EID quality has a negative impact on CFP after controlling for EID breadth. In addition, we find that the positive impact of EID breadth on CFP is achieved by enhancing analyst coverage, while the effect of EID quality on CFP is achieved by analyst recommendation. Our work contributes to the literature on EID by uncovering different mechanisms about how EID quality and EID breadth affect CFP and offers important implications regarding the management and governance of EID practices.

Suggested Citation

  • Nengzhi Yao & Zhe Ouyang & Qiaozhe Guo & Xiuyuan Gong, 2024. "Quality or breadth? Environmental information disclosure, corporate financial performance and the role of analysts," Business Ethics, the Environment & Responsibility, John Wiley & Sons, Ltd., vol. 33(3), pages 431-448, July.
    • Handle: RePEc:wly:buseth:v:33:y:2024:i:3:p:431-448
    DOI: 10.1111/beer.12615
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