Does Environmental Information Disclosure Mitigate Corporate Risk? Evidence from China

Abstract This study is an examination of effects of environmental information disclosure on corporate risk. A study of Chinese listed firms operating from 2009 to 2015 shows that environmental information disclosure reduces firm-investor information asymmetry, decreases uncertainties about assets pricing, and thus significantly decreases corporate risk. Moreover, the relationship is more pronounced for firms in high-growth rather than low-growth industries, suggesting that environmental disclosure mitigates corporate risk for strongly growing industries. The results are robust to various checks including controlling for endogeneity. Implications for investors, companies, and regulators are discussed.