The emerging role of a novel grading system to evaluate environmental information disclosure (EID) performance: empirical analysis of Chinese listed pharmaceutical companies

Author:

Zhang Yuqing1,Wang Zikang2,Bian Ying1

Affiliation:

1. State Key Laboratory of Quality Research in Chinese Medicine, Institute of Chinese Medical Sciences, University of Macau

2. State Key Laboratory of Chemical Biology and Drug Discovery, Department of Applied Biology and Chemical Technology, The Hong Kong Polytechnic University

Abstract

Abstract

Background: Corporate environmental information disclosure (EID) refers to the public disclosure of various types of environmental information, such as pollution monitoring datasets and corporate environmental behaviors. This information can pose unpredictable market risks or affect investors' interests. With increasing global attention to environmental issues, more listed companies, essential elements in stock markets, are publishing corporate social responsibility (CSR) reports, either voluntarily or due to regulatory requirements. Therefore, a systematic methodology to quantitatively evaluate EID performance of listed companies is valuable for further research and applications. Methods: We presented a novel grading system that covers seven sections with different weights to evaluate the EID performance of companies. Given recent evidence that China is emerging as the second-largest pharmaceutical market globally, Chinese listed pharmaceutical companies, as core components of the entire pharmaceutical supply chain in China, deserve further study. We selected Chinese listed pharmaceutical companies on A-shares as the research object and evaluated their EID performance over the past decade (2012-2021) using our grading system. This evaluation was based on necessary documentation (e.g., annual reports, CSR reports) downloaded from open-access databases. Additionally, we conducted a preliminary investigation to identify potential driving factors of EID performance using bivariate correlation analysis. Results: We obtained an overall landscape of the EID performance of Chinese listed pharmaceutical companies over the past decade (2012-2021) and identified three potential driving factors of EID performance: “year of report,” “registered capitalization,” and “total market capitalization.” We also identified the company with the best EID performance over the past decade and provided a systematic description of its EID management system as a case study. Limitation: Firstly, the grading system has a relatively narrow scope of application, which may present difficulties for grading companies outside the pharmaceutical field. Additionally, as a new methodology, parallel comparative analysis with existing methods is needed for future studies. Conclusions: We succeeded in closing the gap in precise EID methodology by presenting a novel grading system suitable for quantitatively evaluating the EID performance of listed pharmaceutical companies. Our statistical evidence highlights three potential driving factors behind EID performance. Lastly, we address a main challenge for the universal improvement of EID management in Chinese listed companies, which could serve as a foundation for further optimization of domestic regulations in China.

Funder

Universidade de Macau

Publisher

Springer Science and Business Media LLC

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