Firm environmental disclosure and government's sustainable leadership: an analysis of keywords in Chinese Government work reports

In: Journal of global responsibility, Band 15, Heft 4, S. 436-465

Abstract

Purpose
This paper examines how firms respond to local government's environment initiatives through textual analysis of government work reports (GWRs). This study aims to provide insights into how firms strategically respond to government's environmental initiatives through their disclosure and investment practices.


Design/methodology/approach
This study uses a textual analysis of GWRs from China's provinces. The frequency and change rate of environmental keywords in these reports are used as a measure of the government's environmental initiatives.


Findings
This study finds that environmental disclosure scores in environmental, social and governance (ESG) reports increase with the frequency or change rate of environmental keywords in provincial GWRs. This effect is more pronounced for non-state-owned enterprises, firms in highly marketized provinces or those listed in a single capital market. However, there is no significant relationship between firms' environmental investments and government initiatives, except for cross-listed firms in provinces with consistently high frequency of environmental keywords in their GWRs.


Practical implications
The findings indicate that government environmental initiatives can shape firms' disclosure behaviors, yet have limited influence on investment decisions, suggesting that environmental disclosure could potentially be opportunistic. This underscores the need for more effective strategies to stimulate firms' environmental investments.


Originality/value
This study provides valuable insights into the differential impacts of government environmental initiatives on firms' disclosure and investment behaviors, contributing to the understanding of corporate environmental responsibility in the context of government initiatives.