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Will Corporate Political Connection Influence the Environmental Information Disclosure Level? Based on the Panel Data of A-Shares from Listed Companies in Shanghai Stock Market

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Abstract

The purpose of the Chinese Environmental Information Disclosure System is to protect the environment through public participation and public opinion. This paper uses data from listed Chinese companies in heavily polluted industries from 2008 to 2013 to examine the influence that corporate political connection has on corporate environmental information disclosure (CEID) level. The results show that firstly, while environmental disclosure level has improved over time, negative information that reflects the real status of environmental management has also been concealed. Secondly, although corporate political connection can influence companies to more actively disclose environmental information, it can also mask political rent-seeking in the guise of protecting the environment. This is especially prevalent in state-owned enterprises where political connection has a significant positive impact on CEID in the eastern and western parts of China. If political connections influence CEID, it will be difficult to improve the quality of environmental disclosure and provide useful information for decision makers. There is an urgent need to standardize and strictly regulate listed companies’ system for environmental information disclosure.

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Notes

  1. Data resource: http://news.eastday.com/chyauto/2013-10-15/870091.html.

  2. Data resource: http://news.china.com/jiedu/1104-1/.

  3. Data resource: http://www.cnpc.com.cn/.

  4. Data resource: http://finance.ifeng.com/a/20150625/13796925_0.shtml.

  5. http://news.xinhuanet.com/fortune/2011-12/17/c_122439284.htm.

  6. The Guideline of Environmental Information Disclosure for Listed Companies (Draft) was circulated by Ministry of Environmental Protection (MEP) in 2010. It proposes that listed companies are liable to disclose environmental information to the public accurately, timely and completely. It first identified the object as “Listed companies at Shanghai Stock Exchange and Shenzhen Stock Exchange A-share market.” Second, it requires sixteen types of heavily polluted industries, including steam supply and power generation, iron and steel, cement, and electrolytic aluminum, to publish annual environmental reports and disclose environmental information such as pollutant emission/disclose status, environmental regulation compliance as well as environmental management information. Third, listed firms in non-heavily polluted industries are encouraged to publish annual environmental reports.

  7. Take per capita GDP as an example, according to “Chinese Statistical Yearbook 2013,” per capita GDP was 57,722 RMB (about 9000 US dollars) in Eastern region, which is higher than the Central region (per capita is 32,427 RM, about 5200 US dollars) and the Western region(per capita is 31,357 RM, about 5000 US dollars).

  8. ST is the abbreviation of “special treatment.” Shanghai Stock Exchange and Shenzhen stock Exchange announced in 1998 that, if the financial status or other status of listed company appeared abnormal such as consecutive losses in two years or natural disasters or major accident, the stock of these companies would be special treatment. Policy of special treatment includes: offering day of the stock price limits 5 %, “ST” must be added before the name of stock, and the medium-term report must be audited. PT is the abbreviation of “particular transfer.” If the company has consecutive losses in 3 years, the stock would be tentative listing base on the “Company Law” and “Security Law.” Shanghai Stock Exchange and Shenzhen stock Exchange implemented particular transfer on these stocks and put “PT” before the name of stock since 1999.

  9. Coming from International Institute for Sustainable Development and Sustainability. http://www.iisd.org.

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Acknowledgments

We would like to thank two anonymous reviewers for very helpful suggestions that substantially improved this paper. This study is supported by the Humanities and Social Science Funds of Ministry of Education of China (11XJC630010) and the National Social Science Fund of China (15XGL017).

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Authors and Affiliations

  1. School of Economics and Management, Northwest University, No. 229 North Tai Bai Avenue, Xi’an, 710069, Shaanxi, China

    Zhihua Cheng, Feng Wang & Yongxiu Bai

  2. Wellesley College, 106 Central Street, Wellesley, MA 02481, USA

    Christine Keung

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  1. Zhihua Cheng
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Correspondence to Zhihua Cheng.

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Cheng, Z., Wang, F., Keung, C. et al. Will Corporate Political Connection Influence the Environmental Information Disclosure Level? Based on the Panel Data of A-Shares from Listed Companies in Shanghai Stock Market. J Bus Ethics 143, 209–221 (2017). https://doi.org/10.1007/s10551-015-2776-0

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