Can Environmental Information Disclosure Enhance Firm Value?—An Analysis Based on Textual Characteristics of Annual Reports

Abstract

This study examines the impact of environmental information disclosure quality on firm value for Chinese listed companies in heavily polluting industries from 2010 to 2021. By controlling for the level of leverage, growth, and corporate governance, a fixed effects model is constructed to test this relationship. Furthermore, this study analyzes the moderating effects of annual report text features, such as length, similarity, and readability, on the relationship between environmental information disclosure and firm value and the heterogeneous impact of firm ownership on this relationship. The main findings of this study are as follows: There is a positive correlation between the level of environmental information disclosure and firm value for Chinese listed companies in heavily polluting industries. Annual report text length and readability positively moderate the relationship between environmental information disclosure and firm value. Annual report text similarity negatively moderates the relationship between environmental information disclosure and firm value performance. Compared with state-owned enterprises, the impact of environmental information disclosure quality on the firm value of no-state-owned enterprises is more significant.