Does more voluntary environmental information disclosure cut down the cost of equity: heavy pollution industries in China

Earnings management and readability of CSR report: Evidence from China

The literature has confirmed that when managers increase profits through earnings management, the readability of annual reports may be reduced Lo (2017), Ye (2018). Whether this conclusion is suitable for Chinese corporate social responsibility (CSR) reports, however, is still unclear. Based on the panel data of 5083 Chinese non-financial listed companies from 2010 to 2019, this paper adopts multiple linear regression to investigate the impact of earnings management on the readability of Chinese CSR reports. The results show that: (1) There is a significant negative correlation between earnings management and the readability of Chinese CSR reports, with the readability of Chinese annual reports as a mediating variable. (2) The negative effect is more significant when companies are not punished for violations, when the internal control index is low, when companies lack ISO14001 certification and when companies do not have independent third-party authentication for Chinese CSR reports. (3) When earnings management just exceeds zero, the readability of Chinese CSR reports decreases. (4) The economic consequences of reducing the readability of Chinese CSR reports are that financing costs are increased and environmental performance is decreased. To improve the quality of information disclosure of listed companies, the recommendations are as follows: First, the government should issue CSR reporting standards to reduce the manipulation of Chinese CSR reports. Second, Chinese CSR reports disclosed by listed companies must be audited by independent third parties to enhance the credibility of the information. Third, the company needs to strengthen its external and internal supervision to reduce the manipulation space for the readability of Chinese CSR reports. This study extends the negative relationship between earnings management and the readability from annual reports to Chinese CSR reports. To prevent investors from detecting earnings management, the readability of Chinese CSR reports may be reduced. At the same time, the study has definitely added value to the existing literature in the domain of CSR.

The impact of corporate environmental disclosure quality on financing constraints: the moderating role of internal control

It is still controversial whether environmental information disclosure (EID) can alleviate firms' financing constraints. Existing studies have not addressed the issue of whether internal control can address the financing constraint in the context of institutional weaknesses and managerial opportunism of environmental information disclosure quality (EIDQ). Therefore, through constructing multiple linear regression analysis, we empirically studied the impact of EIDQ on the financing constraint of Chinese firms and the moderating effect of internal controls on the above relationship. The findings showed that (1) improving EIDQ could significantly alleviate the financing constraint problem of enterprises, and the mitigation effect is more significant among non-state enterprises; (2) the quality of internal control helps to strengthen the mitigation effect of EIDQ on the financing constraint; and (3) further research found that the mitigation effect of EIDQ on financing constraints was more significant in a sample with a high degree of marketization, stricter government regulation, and non-political affiliation among non-state-owned enterprises. This study provides new ideas for promoting institutional optimization of EID and the development of green finance.