Skip to main content
SpringerLink
Log in

Will environmental information disclosure affect bank credit decisions and corporate debt financing costs? Evidence from China’s heavily polluting industries

  • Research Article
  • Published:
Environmental Science and Pollution Research Aims and scope Submit manuscript

This article has been updated

Abstract

In the context of green finance, whether listed companies in heavily polluting industries can convert the external pressure of environmental information disclosure into internal motivation is critical to achieving environmental governance goals. This paper selects 946 listed companies of 16 heavily polluting industries in the Shanghai and Shenzhen stock markets as samples to explore whether environmental information disclosure can help companies increase bank credit support and reduce debt financing costs to transform their external pressures into internal motivation. The empirical results show that there is a significant positive correlation between environmental information disclosure and bank credit decisions. From the perspective of financing scale, heavily polluting companies have the inherent motivation to disclose environmental information actively and proactively to obtain more credit support. There is no significant relationship between the corporate debt financing cost and environmental information disclosure. This paper puts forward some critical policy suggestions for government decision makers, heavily polluting enterprises, and financial institutions.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

Data availability

The data used to support the findings of this study are available from the corresponding author upon request.

Change history

  • 25 February 2022

    Ruili 2021 was removed as it was a duplicate of the reference Wang 2021.

References

  • Aggarwal R, Dow S (2012) Corporate governance and business strategies for climate change and environmental mitigation. Eur J Financ 18:311–331

    Article  Google Scholar 

  • Akerlof GA (1970) The market for “lemons”: quality uncertainty and the market mechanism. Q J Econ 84:488–500

    Article  Google Scholar 

  • Alvis KL (2013) Do declines in bank health affect borrowers’ voluntary disclosures? Evidence from international propagation of banking shocks. J Account Res 52:541–581

    Google Scholar 

  • Bergh DD, Connelly BL Jr, Ketchen DJ Jr, Lu MS (2014) Signaling theory and equilibrium in strategic management research: an assessment and a research agenda. J Manag Stud 51:1334–1360

    Article  Google Scholar 

  • Biais B, Foucault T, Moinas S (2015) Equilibrium fast trading. J Financ Econ 116:292–313

    Article  Google Scholar 

  • Bradley SW, Shepherd DA, Wiklund J (2011) The importance of slack for new organizations facing ‘tough’ environments. J Manag Stud 48:1071–1097

    Article  Google Scholar 

  • Brammer S, Millington A (2008) Does it pay to be different? An analysis of the relationship between corporate social and financial performance. Strateg Manag J 29:1325–1343

    Article  Google Scholar 

  • Brooks C, Oikonomou I (2018) The effects of environmental, social and governance disclosures and performance on firm value: a review of the literature in accounting and finance. Br Account Rev 50:1–15

    Article  Google Scholar 

  • Buysse K, Verbeke A (2003) Proactive environmental strategies: a stakeholder management perspective. Strateg Manag J 24:453–470

    Article  Google Scholar 

  • Certo ST (2003) Influencing initial public offering investors with prestige: signaling with board structures. Acad Manag Rev 28:432–446

    Article  Google Scholar 

  • Connelly BL, Certo ST, Ireland RD, Reutzel CR (2011) Signaling theory: a review and assessment. J Manag 37:39–67

    Google Scholar 

  • Cooper SA, Raman KK, Yin J (2018) Halo effect or fallen angel effect? Firm value consequences of greenhouse gas emissions and reputation for corporate social responsibility. J Account Public Policy 37:226–240

    Article  Google Scholar 

  • Cui J, Jo H, Na H (2018) Does corporate social responsibility affect information asymmetry? J Bus Ethics 148:549–572

    Article  Google Scholar 

  • Dejean F, Martinez I (2009) Environmental disclosure and the cost of equity: the French case. Account Eur 6:57–80

    Article  Google Scholar 

  • Dell'Ariccia G, Laeven L, Suarez GA (2017) Bank leverage and monetary policy’s risk-taking channel: evidence from the United States. J Financ 72:613–654

    Article  Google Scholar 

  • Eichholtz P, Holtermans R, Kok N, Yonder E (2019) Environmental performance and the cost of debt: evidence from commercial mortgages and REIT bonds. J Bank Financ 102:19–32

    Article  Google Scholar 

  • El-Kassar A, Singh SK (2019) Green innovation and organizational performance: the influence of big data and the moderating role of management commitment and HR practices. Technol Forecast Soc Changes 144:483–498

    Article  Google Scholar 

  • Fonseka M, Rajapakse T, Richardson G (2019) The effect of environmental information disclosure and energy product type on the cost of debt: evidence from energy firms in China. Pac Basin Financ J 54:159–182

    Article  Google Scholar 

  • Franco F, Urcan O, Vasvari FP (2015) Corporate diversification and the cost of debt: the role of segment disclosures. Account Rev 91:1139–1165

    Article  Google Scholar 

  • Gao H, Zhu H, Meng F (2018) Does the quality of environmental information disclosure affect the cost of debt financing? Empirical evidence from listed companies in environmentally sensitive industries in China. J Nanjing Audit Univ 15:20–28

  • Jiang C, Zhang F, Wu C (2021) Environmental information disclosure, political connections and innovation in high-polluting enterprises. Sci Total Environ 764:144248

    Article  CAS  Google Scholar 

  • Jin Y, Gao X, Wang M (2021) The financing efficiency of listed energy conservation and environmental protection firms: evidence and implications for green finance in China. Energy Policy 153:112254

    Article  Google Scholar 

  • Kreps DM, Paul M, John R, Robert W (1982) Rational cooperation in the finitely repeated prisoners’ dilemma. J Econ Theory 27:245–252

    Article  Google Scholar 

  • Li W, Zhang Y, Zheng M et al (2019) Research on green governance and evaluation of Chinese listed companies. Manag World 35:126–133

    CAS  Google Scholar 

  • Liu S, Liu C, Yang M (2021) The effects of national environmental information disclosure program on the upgradation of regional industrial structure: evidence from 286 prefecture-level cities in China. Struct Chang Econ Dyn 58:556–561

    Article  Google Scholar 

  • Luo W, Guo X, Zhong S, Wang J (2019) Environmental information disclosure quality, media attention and debt financing costs: evidence from Chinese heavy polluting listed companies. J Clean Prod 231:268–277

    Article  Google Scholar 

  • Lv M, Xu G, Shen Y et al (2018) Heterogeneous debt governance, contract incompleteness and environmental information disclosure. Account Res 5:67–74

    Google Scholar 

  • Meng X (2010) Interactive relation between corporate social responsibility disclosure and the cost of capital: an analysis framework based on asymmetric information. Account Res 22:25–29

    Google Scholar 

  • Minnis M (2011) The value of financial statement verification in debt financing: evidence from Finland. Int J Audit 2:88–108

    Google Scholar 

  • Ni J, Kong L (2016) Environmental information disclosure, bank credit decisions and debt financing costs—empirical evidence from China’s Shanghai and Shenzhen A-share listed companies in heavily polluting industries. Econ Rev 1:147–156

    Google Scholar 

  • Niu H, Zang X, Zhang P (2020) Institutional changes and effect evaluation of China’s green finance policy: taking the empirical research of green credit as an example. Manag Rev 32:3–12

    Google Scholar 

  • Qiu Y, Shaukat A, Tharyan R (2016) Environmental and social disclosures: link with corporate financial performance. Br Account Rev 48:102–116

    Article  Google Scholar 

  • Rosa FL, Liberatore G, Mazzi F, Terzani S (2018) The impact of corporate social performance on the cost of debt and access to debt financing for listed European non-financial firms. Eur Manag J 36:519–529

    Article  Google Scholar 

  • Roychowdhury S, Shroff N, Verdi RS (2019) The effects of financial reporting and disclosure on corporate investment: a review. J Account Econ 68:101246

    Article  Google Scholar 

  • Schiemann F, Sakhel A (2019) Carbon disclosure, contextual factors, and information asymmetry: the case of physical risk reporting. Eur Account Rev 28:791–818

  • Shen H, Ma Z (2014) Regional economic development pressure, corporate environmental performance and debt financing. Financ Res 2:153–166

  • Spence M (2002) Signaling in retrospect and the informational structure of markets. Am Econ Rev 92:434–459

    Article  Google Scholar 

  • Strausz R (2017) A theory of crowdfunding: a mechanism design approach with demand uncertainty and moral hazard. Am Econ Rev 107:1430–1476

    Article  Google Scholar 

  • Tang J, Li P (2008) An empirical study on environmental information disclosure: evidences from the chemical industry in China’s securities market. China Popul Res Environ 5:112–117

    Google Scholar 

  • Tzouvanas P, Kizys R, Chatziantoniou I, Sagitova R (2020) Environmental disclosure and idiosyncratic risk in the European manufacturing sector. Energy Econ 87:104715

    Article  Google Scholar 

  • Wan M, Wasiuzzaman S (2021) Environmental, social and governance (ESG) disclosure, competitive advantage and performance of firms in Malaysia. Clean Environ Syst 2:100015

    Article  Google Scholar 

  • Wang R (2021) Management governance, environmental accounting information disclosure and financing constraints. Accounting Newsletter 3:73–76

  • Wang X, Xu X, Wang C (2013) Public pressure, social reputation, internal governance and corporate environmental information disclosure: evidence from listed companies in China’s manufacturing industry. Nankai Manag Rev 2:82–91

    CAS  Google Scholar 

  • Wu MW, Shen CH (2013) Corporate social responsibility in the banking industry: motives and financial performance. J Bank Financ 37:3529–3547

    Article  Google Scholar 

  • Xing C, Zhang Y, Tripe D (2021) Green credit policy and corporate access to bank loans in China: the role of environmental disclosure and green innovation. Int Rev Financ Anal 12:101838

    Article  Google Scholar 

  • Zhang C (2017) Political connections and corporate environmental responsibility: adopting or escaping? Energy Econ 68:539–547

    Article  Google Scholar 

  • Zhang Z, Zhang C, Cao D (2019) Is the certification of enterprise environmental management system effective? Nankai Manag Rev 22:123–134

    Google Scholar 

  • Zhu N, Lai X (2020) Research on China’s green credit efficiency evaluation and improvement path. Financ Superv Res:41–58

  • Zhu W, Sun Y, Tang Q (2019) Substantial or selective disclosure: the impact of corporate environmental performance on the quality of environmental information disclosure. Account Res 3:10–17

    Google Scholar 

Download references

Acknowledgements

The authors would like to express their sincere gratitude to the anonymous reviewers and the editors for their truly valuable comments.

Funding

This work was supported by the National Natural Science Foundation of China (No. 71704098, 72001191, 72003110), Key Research Project of Financial Application in Shandong Province (No. 2021-JRZZ-25), and Key Project of Philosophy and Social Science Foundation of Jinan City (No. JNSK21B18).

Author information

Authors and Affiliations

  1. School of Accounting, Shandong Youth University of Political Science, Jinan, 250103, China

    Mo Du

  2. Business School, Shandong Normal University, Jinan, 250014, China

    Shanglei Chai, Shuqi Wang & Zhilong Li

  3. Center for Energy, Environment & Economy Research, Zhengzhou University, Zhengzhou, 450001, China

    Wei Wei

Authors
  1. Mo Du
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Shanglei Chai
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Wei Wei
    View author publications

    You can also search for this author in PubMed Google Scholar

  4. Shuqi Wang
    View author publications

    You can also search for this author in PubMed Google Scholar

  5. Zhilong Li
    View author publications

    You can also search for this author in PubMed Google Scholar

Contributions

Mo Du: conceptualization, writing—original draft, writing—review and editing. Shanglei Chai: funding acquisition, formal analysis, writing—original draft. Wei Wei: funding acquisition, writing—review and editing. Shuqi Wang: methodology. Zhilong Li: data curation.

Corresponding author

Correspondence to Wei Wei.

Ethics declarations

Ethics approval and consent to participate

Not applicable.

Consent for publication

Not applicable.

Conflict of interest

The authors declare no competing interests.

Additional information

Responsible Editor: Nicholas Apergis

Publisher’s note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Du, M., Chai, S., Wei, W. et al. Will environmental information disclosure affect bank credit decisions and corporate debt financing costs? Evidence from China’s heavily polluting industries. Environ Sci Pollut Res 29, 47661–47672 (2022). https://doi.org/10.1007/s11356-022-19229-4

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s11356-022-19229-4

Keywords

Search

Navigation