The Effects Of Environmental Information Disclosure On Stock Market

With economic development, air pollution, water environmental degradationand other environmental issues are highlighted. At the same time, sustainabledevelopment, green development and low-carbon development concept deeply rootamong governments, investors, shareholders and other stakeholders. And the moreincreasing awareness of the importance of corporate environmental management, themore increasing demand for enterprise environmental information disclosure.Environmental information disclosure as a tool for enterprise communicatingits environmental performance with the outside world, has become a hot topic forscholars from various countries. Domestic and foreign literatures on corporateenvironmental information disclosure separate from the descriptive analysis, factoranalysis to effect analysis. On disclosure consequences, foreign studies have foundthat enterprise environmental information disclosure impact enterprise value via thestock prices changes in capital market. However, domestic studies of capital marketreactions on environmental information disclosure are relatively few and researchconclusions are also not consistent. We will discuss the effect of environmentalinformation disclosure on stock market performance.In the basis of the literature review, environmental information disclosuremotivation theory and capital market information disclosure theory analysis, wepropose three research hypotheses: stock market has different reactions on timing ofenvironmental reporting disclosures, environmental information disclosure based oncompany’s environmental report affect stock market’s performance, environmentevents increase volatility of stock market returns. Then, using event study methodand regression analysis method, we collect112samples in500Chinese listedcompanies in2012to examine the timeliness and substantive of environmentalreporting disclosure on stock market performance, and gather164environmentalevents that happen in2009,2010,2011or2012to analysis their influence on stockmarket. Our research found that the environmental information disclosure level ofChina’s listed companies is relatively low; stock market can respond to thetimeliness of environmental reporting disclosure and environmental events, but itcould not respond to the substantive of environmental reporting disclosure. Finally,we propose few recommendations to improve the status of corporate environmentalinformation disclosure.