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Carbon emission disclosures and financial reporting quality: Does ownership structure and economic development matter?

Bilal; Tan, Duojiao; Komal, Bushra; Ezeani, Ernest; Usman, Muhammad; Salem, Rami

Authors

Duojiao Tan

Bushra Komal

Ernest Ezeani

Muhammad Usman

Rami Salem



Abstract

Carbon emission disclosures have lately gained considerable attention from investors, public companies, and regulators due to their adverse impact on global warming. Our study examines the implication of the extent of carbon emission disclosures on financial reporting quality. Using a sample of the Chinese high polluting companies from 2012 to 2018, we found a negative relationship between carbon emission disclosures and discretionary accruals, indicating that companies with more carbon disclosures have better financial reporting quality. In addition, we find that state-owned Chinese companies with more carbon disclosures experienced better financial reporting quality. Furthermore, we find that companies from more developed regions that engage in carbon emission disclosure are also associated with higher financial reporting quality than companies from less developed regions. Our findings are robust using alternative methodologies. Our study has implications for companies' managers since it helps them legitimize their actions to stakeholders by providing carbon emission disclosures and higher financial reporting quality. It will assist the Chinese regulators and policymakers in encouraging high-polluting companies to voluntarily disclose more carbon-related matters for different stakeholders.

Citation

Bilal, Tan, D., Komal, B., Ezeani, E., Usman, M., & Salem, R. (2022). Carbon emission disclosures and financial reporting quality: Does ownership structure and economic development matter?. Environmental Science and Policy, 137, 109-119. https://doi.org/10.1016/j.envsci.2022.08.004

Journal Article Type Article
Acceptance Date Aug 4, 2022
Online Publication Date Sep 6, 2022
Publication Date 2022-11
Deposit Date Nov 9, 2023
Journal Environmental Science & Policy
Print ISSN 1462-9011
Electronic ISSN 1873-6416
Publisher Elsevier
Peer Reviewed Peer Reviewed
Volume 137
Pages 109-119
DOI https://doi.org/10.1016/j.envsci.2022.08.004
Keywords Carbon emission disclosures; Financial reporting quality; State-owned enterprises; High polluting industries; Climate change
Public URL https://durham-repository.worktribe.com/output/1903495