Market Reaction To The Disclosure Of Environmental Events

Environmental issues, which are faced by the development ofChina’s economic, have become a severe test to China. The party’s"Eighteen" clearly puts forward the strategy that, we should promote“green development, cycle of development and low-carbondevelopment”, and vigorously promote the construction of ecologicalcivilization. Indicates the decision to adhere to the strategy of sustainabledevelopment, and take the path of circular economic development.Environmental information disclosure has long been a hot researchtheory of environmental accounting issues. With adequate disclosure ofenvironmental information, it can cause the public and the capital marketfor corporate environmental protection concerns and increase thepolitical costs of enterprises thereby to promote enterprises to strengthenenvironmental protection and ecological construction in the input andaction. In order to do this, in recent years the government has issued anumber of environmental laws and regulations to regulate the parties ofthe disclosure of environmental information, caused widespread concern in the community. However, the constructing of China’s environmentalinformation disclosure system is still in its infancy, and thecorresponding market surveillance mechanisms and regulatory policy isnot perfect. On this basis, the paper selects the disclosure information ofenvironmental events as a research object, and investigates thecorrelation between environmental events disclosure information and thestock value. It could reveal the effectiveness of the implementation ofour environmental policy.The paper collects the2008-2012information of heavily pollutingindustries listed companies which occurred the disclosure ofenvironmental events. By calculating Cumulative Average AbnormalReturn (CAAR) the paper uses event study to inspect the market reactionto the disclosure of different categories and different times ofenvironmental events. The paper analyzes that, positive environmentalincident that responses to heavy polluting industries listed companies isnot significantly, and only environmental certification events’ stockmarket reaction is more rapid, significant, but not last long; thecumulative average abnormal returns of negative environmental event information disclosure have a significant negative correlation. Moreover,reaction of negative events is significant, and investor attention is morefocused on the disclosure of the media, listed companies also tend to beannounced only after the media exposure and be interpreted. Theformulation and implementation of the relevant environmental laws andregulations conducive to environmental events disclosed further affectthe capital market, indicated that our investors, listed companies andother stakeholders have begun to spontaneous concerned aboutenvironmental protection, disclosure of environmental events haveaffected the business performance. And environmental strategies thatpromote economic restructuring have achieved initial results. Finally, thepaper gives the countermeasures and suggestions to improve the statusquo of the environment event disclosure. In connection with status quothat the issue and the effectiveness of disclosure of environmental eventsboth exist, the paper suggests that government departments to furtherstrengthen the construction of relevant environmental laws andregulations, consider to introduce third-party to assess and monitor thecorporate environmental, and improve the environmental awareness of the stakeholders, also ask enterprise to establish a green businessphilosophy, improve the environmental performance appraisal system.