Environmental Information Disclosure and Corporate Green Innovation: The Moderating Effect of Formal and Informal Institutions

Abstract

Green innovation has been recognized as a strategic priority to build competitive advantage, but few studies have examined the impact of environmental information disclosure on green innovation in emerging economies. By integrating the stakeholder and institutional theories, this study explores the relationship between environmental information disclosure and green innovation under formal and informal institutions. Using the panel data of Chinese A-share listed companies from 2009 to 2021, the findings reveal that environmental information disclosure positively affects corporates’ green innovation. Further, this research finds that this positive effect is strengthened by the formal institution (proxied by the institutional environment) but weakened by the informal institution (proxied by political connection). Results are valid after addressing the potential endogeneity problem and remain unchanged in robustness tests. This study’s findings affirm the decision usefulness of environmental information disclosure that corporates can use as an effective strategy to promote green innovation.