Corporate environmental information disclosure and stock price crash risk: Evidence from Chinese listed heavily polluting companies

Abstract

Environmental performance has gained great prominence for firms in recent years. This paper examines the effect of corporate environmental information disclosure on stock price crash risk based on a large sample of Chinese listed companies in heavily polluting industries over the 2013–2019 period. We find that environmental information disclosure can reduce future stock price crash risk. The results hold after addressing potential concerns for endogeneity. Moreover, we deeply analyze the mediating effects and identify that operational transparency and investors’ reactions work as mediators while information authenticity works as a suppressor. Further, it is also found that internet attention plays a moderating role that strengthens the negative relationship between environmental information disclosure and stock price crash risk. Our results highlight the importance of environmental disclosure in corporate strategic decisions and deliver multidimensional implications.