Green Image in Supply Chains: Selective Disclosure of Green Suppliers

33 Pages Posted: 12 Oct 2020 Last revised: 1 Mar 2022

See all articles by Yilin Shi

Yilin Shi

Shanghai Jiao Tong University

Jing Wu

The Chinese University of Hong Kong (CUHK) - CUHK Business School

Yu Zhang

Peking University - Guanghua School of Management

Date Written: July 25, 2020

Abstract

Perception regarding a customer firm's green image depends not only on itself but also on its known suppliers. This paper provides the first empirical evidence linking the supplier's environmental performance and supply chain information disclosure. Specifically, we uncover robust evidence showing that customer firms voluntarily disclose relationships with environmentally responsible ("good") suppliers while selectively not disclosing relationships with "bad" suppliers. An instrumental variable approach using temperature volatility worldwide supports a causal interpretation of our finding. Such corporate behavior increases with growing public awareness of climate change and decreases with strengthened regulations on environmental information transparency. This observation is more salient for firms that face greater competition or care more about their brand awareness and for firms that have more significant holdings by institutional investors. Firms that selectively disclose "green" suppliers experience increases in sales and valuation, suggesting that product consumers and financial markets do not fully take this behavior into account.

Keywords: supply chain management, selective disclosure, corporate social responsibility, green image

JEL Classification: F30, F36, G28, G30, G38, G34, M14, Q50

Suggested Citation

Shi, Yilin and Wu, Jing and Zhang, Yu, Green Image in Supply Chains: Selective Disclosure of Green Suppliers (July 25, 2020). Available at SSRN: https://ssrn.com/abstract=3700310 or http://dx.doi.org/10.2139/ssrn.3700310

Yilin Shi

Shanghai Jiao Tong University ( email )

Antai College of Economics and Management
Shanghai, Shanghai 200030
China

Jing Wu (Contact Author)

The Chinese University of Hong Kong (CUHK) - CUHK Business School ( email )

Cheng Yu Tung Building
12 Chak Cheung Street
Shatin, N.T.
Hong Kong

HOME PAGE: http://www.jingwulab.org

Yu Zhang

Peking University - Guanghua School of Management ( email )

Peking University
Beijing, Beijing 100871
China

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