Does Disclosing Well Lead to Doing Good?

53 Pages Posted: 15 Mar 2023 Last revised: 26 Dec 2023

See all articles by Jinsong Liu

Jinsong Liu

Sichuan University - Business School

Jiaren Pang

Tsinghua University - School of Economics & Management

Xinyi Zhang

Sun Yat-sen University (SYSU) - School of Business

Date Written: July 8, 2021

Abstract

We examine the impact of disclosure-based environmental regulations on corporate innovation using a quasi-natural experiment in China. We find that firms increase green innovation, but not non-green innovation, following a mandate that requires them to regularly disclose their corporate social responsibility (CSR) activities. Further analyses show that the CSR disclosure mandate leads to higher media coverage of disclosing firms’ environmental issues, and the increase mainly comes from negative environmental news. By contrast, voluntary CSR disclosure does not affect corporate green innovation, and it increases positive but not negative environmental media coverage. These findings suggest that (1) it is the mandatory feature of the mandate, not the act of disclosure, that matters most for the positive effect on corporate green innovation; and (2) the negative media coverage induced by mandatory CSR disclosure plays a disciplinary role and promotes green innovation, while the positive media coverage induced by voluntary CSR disclosure does not. Additional analyses document a high level of quality of the green patent applications filed subsequent to the mandate, indicating that they are unlikely associated with greenwashing.

Keywords: Green innovation, corporate social responsibility, mandatory disclosure

JEL Classification: G38, O31, Q56

Suggested Citation

Liu, Jinsong and Pang, Jiaren and Zhang, Xinyi, Does Disclosing Well Lead to Doing Good? (July 8, 2021). Available at SSRN: https://ssrn.com/abstract=4383949 or http://dx.doi.org/10.2139/ssrn.4383949

Jinsong Liu

Sichuan University - Business School ( email )

China

Jiaren Pang (Contact Author)

Tsinghua University - School of Economics & Management ( email )

Beijing, 100084
China

Xinyi Zhang

Sun Yat-sen University (SYSU) - School of Business ( email )

135 Xingang West Road
Sun Yat-Sen University
Guangzhou, Guangdong 510275
China

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