Advertisement

Journal of Business Ethics

, Volume 143, Issue 1, pp 209–221 | Cite as

Will Corporate Political Connection Influence the Environmental Information Disclosure Level? Based on the Panel Data of A-Shares from Listed Companies in Shanghai Stock Market

  • Zhihua Cheng
  • Feng Wang
  • Christine Keung
  • Yongxiu Bai
Article

Abstract

The purpose of the Chinese Environmental Information Disclosure System is to protect the environment through public participation and public opinion. This paper uses data from listed Chinese companies in heavily polluted industries from 2008 to 2013 to examine the influence that corporate political connection has on corporate environmental information disclosure (CEID) level. The results show that firstly, while environmental disclosure level has improved over time, negative information that reflects the real status of environmental management has also been concealed. Secondly, although corporate political connection can influence companies to more actively disclose environmental information, it can also mask political rent-seeking in the guise of protecting the environment. This is especially prevalent in state-owned enterprises where political connection has a significant positive impact on CEID in the eastern and western parts of China. If political connections influence CEID, it will be difficult to improve the quality of environmental disclosure and provide useful information for decision makers. There is an urgent need to standardize and strictly regulate listed companies’ system for environmental information disclosure.

Keywords

Political connection Corporate environmental information disclosure Government ownership Regional difference 

Notes

Acknowledgments

We would like to thank two anonymous reviewers for very helpful suggestions that substantially improved this paper. This study is supported by the Humanities and Social Science Funds of Ministry of Education of China (11XJC630010) and the National Social Science Fund of China (15XGL017).

References

  1. Aerts, W., Cormier, D., & Magnan, M. (2008). Corporate environmental disclosure, financial markets and the media: an international perspective. Ecological Economics, 64, 643–659.CrossRefGoogle Scholar
  2. Agrawal, A., & Koneber, C. R. (2001). Do some outside directors play a political role? Journal of Law and Economics, 44, 180–198.CrossRefGoogle Scholar
  3. Al-ruwaijri, S. A., Christensen, T. E., & Hughes, K. E, I. I. (2004). The relations among environmental disclosure, environmental performance and economic performance: a simultaneous equations approach. Accounting, Organizations and Society, 29(5–6), 447–471.CrossRefGoogle Scholar
  4. Ane, P. (2012). An assessment of the quality of environmental information disclosure of corporate in China. Systems Engineering Procedia, 5, 420–426.CrossRefGoogle Scholar
  5. Barbu, E. M., et al. (2014). Mandatory environmental disclosures by companies complying with IASs/IFRSs: The cases of France, Germany, and the UK. The International Journal of Accounting, 49(2), 231–247.CrossRefGoogle Scholar
  6. Bliss, M. A., & Gul, F. A. (2012). Political connection and cost of debt: Some Malaysian evidence. Journal of Banking & Finance, 36(5), 1520–1527.CrossRefGoogle Scholar
  7. Boubakri, N., Cosset, J., & Saffar, W. (2008). Political connections of newly private firms. Journal of Corporate Finance, 14, 654–673.CrossRefGoogle Scholar
  8. Branco, M. C., & Rodrigues, L. L. (2006). Corporate social responsibility and resource based perspectives. Journal of Business Ethics, 69(2), 111–132.CrossRefGoogle Scholar
  9. Capron, L., & Chatain, O. (2008). Competitors’ resource-oriented strategies: Acting on competitors’ resources through interventions in factor markets and political markets. Academy of Management Review, 33(1), 97–121.CrossRefGoogle Scholar
  10. Charl, D. V., & Charis, J. V. S. (2010). Shareholders’ requirements for corporate environmental disclosures: A cross country comparison. The British Accounting Review, 42, 227–240.CrossRefGoogle Scholar
  11. Cho, C., & Pattern, D. (2007). The role environmental disclosures as tools of legitimacy: A research note. Accounting, Organizations and Society, 32, 639–647.CrossRefGoogle Scholar
  12. Clarkson, P. M., et al. (2008). Revisiting the relation between environmental performance and environmental disclosure: An empirical analysis. Accounting, Organizations and Society, 33(3), 303–327.CrossRefGoogle Scholar
  13. Cormier, D., Magnan, M., & Vothoven, B. V. (2005). Environmental disclosure quality in large German companies: Economic incentives, public pressures or institutional conditions? European Accounting Review, 14(1), 3–39.CrossRefGoogle Scholar
  14. Faccio, M. (2002). Politically-connected firms: Can they squeeze the state? University of Notre dame, Working Paper.Google Scholar
  15. Faccio, M. (2006). Politically connected firms. The American Economic Review, 3, 369–386.CrossRefGoogle Scholar
  16. Faccio, M. (2007). The characteristics of politically connected firms. Purdue CIBER working papers, paper 51.Google Scholar
  17. Fan, G., Wang, X. L., & Zhu, H. P. (2011). China’s marketization index—report of regional market relative process. Beijing: Economic Science Press.Google Scholar
  18. Fan, J., Wong, T. J., & Zhang, T. (2007). Politically connected CEOs, corporate governance and post-IPO performance of China’s newly partially privatized firms. Journal of Financial Economics, 84, 330–357.CrossRefGoogle Scholar
  19. Gisbert, A., & Navallas, B. (2013). The association between voluntary disclosure and corporate governance in the presence of severe agency conflicts. Advances in Accounting, Incorporating Advances In International Accounting, 29, 285–298.Google Scholar
  20. Hassan, A., & Ibrahim, E. (2012). Corporate environmental information disclosure: Factors influencing companies’ success in attaining environmental awards. Corporate Social Responsibility and Environmental Management, 19, 32–46.CrossRefGoogle Scholar
  21. Henisz, W. J., & Zelner, B. A. (2003). The strategic organization of political risks and opportunities. Strategic Organization, 1(4), 451–460.CrossRefGoogle Scholar
  22. Hillman, A., Keim, G., & Schuler, D. (2004). Corporate political activity: A review and research agenda. Journal of Management, 30(6), 837–857.CrossRefGoogle Scholar
  23. Hossain, M., & Reaz, M. (2007). The determinants and characteristics of voluntary disclosure by Indian banking companies. Corporate Social Responsibility Environment Management, 14(5), 274–288.CrossRefGoogle Scholar
  24. Huang, J., & Zhou, C. N. (2012). Empirical research of ownership structure and management behavior affecting the disclosure of environmental information—evidence from heavily polluted industries in shanghai stock exchange. Chinese Soft Science, 1, 133–143.Google Scholar
  25. Jia, M., & Zhang, Z. (2010). Does political connection of executives influence corporate charitable behaviors? Management World, 4, 99–113.Google Scholar
  26. Kansal, M., Joshi, M., & Batra, G. S. (2014). Determinants of corporate social responsibility disclosure: Evidence from India. Advances in Accounting, Incorporating Advances in International Accounting, 30, 217–229.Google Scholar
  27. Khwaja, I. A., & Mian, A. (2005). Do lenders favor politically connected firms? Rent-provision in an emerging financial market. Quarterly Journal of Economics, 120, 1391–1411.CrossRefGoogle Scholar
  28. Krueger, A. (1974). The political economy of the rent-seeking society. American Economic Review, 64(3), 291–303.Google Scholar
  29. Latridis, G. E. (2013). Environmental disclosure quality: Evidence on environmental performance, corporate governance and value relevance. Emerging Markets Review, 14, 55–75.CrossRefGoogle Scholar
  30. Lewis, B. W., Walls, J. L., & Dowell, G. W. S. (2013). Difference in degrees: CEO characteristics and firm environmental disclosure. Strategic Management Journal, 35(5), 712–722.CrossRefGoogle Scholar
  31. Li, H. B. (2006). Why do entrepreneurs enter politics? Evidence from China. Economic Inquiry, 44(3), 559–578.CrossRefGoogle Scholar
  32. Li, H. B., & Meng, L. S. (2008). Political connection, financing and firm performance: Evidence from Chinese private firms. Journal of Development Economics, 87, 283–299.CrossRefGoogle Scholar
  33. Li, H., Meng, L., & Zhang, J. (2006). Why do entrepreneurs enter politics ? Evidence from China. Economic Inquiry, 44(3), 559–578.CrossRefGoogle Scholar
  34. Liu, X. B., & Anbumozhi, V. (2009). Determinant factors of corporate environmental information disclosure: An empirical study of Chinese listed companies. Journal of Cleaner Production, 17, 593–600.CrossRefGoogle Scholar
  35. Liu, Z. G., & Liu, T. T. (2011). Empirical analysis on environmental disclosure and environmental performance level of listed steel companies. Energy Procedia, 5, 2211–2218.CrossRefGoogle Scholar
  36. Lu, X., & Li, J. M. (2010). A research on the environment information disclosure of China listed companies: A case study of the listed manufacturing industry of a-shares firms during the period from 2007 to 2008 in shanghai exchange stock market. Journal of Audit and Economics, 25(3), 62–69.Google Scholar
  37. Meng, X. H., Li, D., & Zhang, Z. (2013). Towards environmental disclosure of Chinese listed companies: A paper making & printing industry perspective. International Conference on Information, Business and Education Technology.Google Scholar
  38. Meng, X. H., Zeng, S. X., & Tam, C. M. (2013b). From voluntarism to regulation: A study on ownership, economic performance and corporate environmental information disclosure in China. Journal of Business Ethics, 116, 217–232.CrossRefGoogle Scholar
  39. Okhmatovskiy, I. (2010). Performance implications of ties to the government and SOEs: A political embeddedness perspective. Journal of Management Studies, 47(6), 1020–1047.CrossRefGoogle Scholar
  40. Patten, D. M. (2002a). Media exposure, public policy pressure, and environmental disclosure: An examination of the impact of tri data availability. Accounting Forum, 26, 152–171.CrossRefGoogle Scholar
  41. Patten, D. M. (2002b). The relation between environmental performance and environmental disclosure: A research note. Accounting, Organizations and Society, 27(8), 763–773.CrossRefGoogle Scholar
  42. Peng, M. W. (2003). Institutional transitions and strategic choices. Academy of Management Review, 28(2), 275–296.Google Scholar
  43. Peng, M. W., & Luo, Y. D. (2002). Managerial ties and firm performance in a transition economy: The nature of a micro-macro link. Academy of Management Journal, 43(3), 486–501.CrossRefGoogle Scholar
  44. Peters, G. F., & Romi, A. M. (2013). Discretionary compliance with mandatory environmental disclosure: Evidence from SEC filings. Journal of Account and Public Policy, 32, 213–236.CrossRefGoogle Scholar
  45. Prencipe, A. (2004). Proprietary costs and determinants of voluntary segment disclosure: evidence from Italian listed companies. European Accounting Review, 13(2), 319–340.CrossRefGoogle Scholar
  46. Rajwani, T., & Liedong, T. A. (2015). Political activity and firm performance within nonmarket research: A review and international comparative assessment. Journal of World Business, 50, 273–283.CrossRefGoogle Scholar
  47. Robertson, J. L., & Barling, J. (2013). Greening organization through leaders’ influence on employees’ pro-environmental behaviors. Journal of Organizational Behavior, 34, 176–194.CrossRefGoogle Scholar
  48. Scott, R. W. (2002). The changing world of Chinese enterprise: An institutional perspective. In T. Tsui & C. Lau (Eds.), The management of enterprises in the people’s republic of china (pp. 59–78). Norwell: Kluwer Academic.CrossRefGoogle Scholar
  49. Shen, H. T., & Feng, J. (2012). Media monitoring, government supervision and corporate environment disclosure. Accounting Research, 2, 72–78.Google Scholar
  50. Shleifer, A., & Vishny, R. W. (1994). Politician and firms. Quarterly Journal of Economics, 109, 995–1025.CrossRefGoogle Scholar
  51. Staden, C. J. A., & Hooks, J. A. (2007). Comprehensive comparison of corporate environmental reporting and responsiveness. The British Accounting Review, 39, 197–210.CrossRefGoogle Scholar
  52. Tang, J. F., & Li, P. F. (2008). Environmental disclosure of chemical industry: Evidence from Chinese A-share market. China Population, Resource and Environment, 18(5), 112–117.Google Scholar
  53. Wang, X., Xu, X. D., & Wang, C. (2013). Public pressure, social reputation, inside governance and firm environmental information disclosure: The evidence from Chinese listed manufacturing firms. Nankai Business Review, 16(2), 82–91.Google Scholar
  54. Wang, S. Y., et al. (2014). Invisible hand: The impact of political gene has on corporate merger control. Management World, 8, 102–114.Google Scholar
  55. Webb, E. (2004). An examination of socially responsible firms’ board structure. Journal of Management and Governance, 8, 255–277.CrossRefGoogle Scholar
  56. Wiseman, J. (1982). An evaluation disclosures made in corporate annual reports. Accounting Organization and Society, 7(10), 553–563.Google Scholar
  57. Wu, A. Q., & Jin, B. M. (2008). Personal status, enterprise development, social responsibility and the system risk: Research of the motives of China’s private entrepreneurs’ political participation. China’s Industrial Economy, 7, 141–150.Google Scholar
  58. Yang, H. H., et al. (2014). A review of Chinese and English language studies on corporate environmental reporting in China. Critical Perspective on Accounting,. doi: 10.1016/j.cpa.2014.10.001.Google Scholar
  59. Zeng, S. X., Xu, X. D., & Yin, H. T. (2012). Factors that drive Chinese listed companies in voluntary disclosure of environmental information. Journal of Business Ethics, 109, 309–321.CrossRefGoogle Scholar
  60. Zeng, S. X., et al. (2010). Towards corporate environmental information disclosure: an empirical study in China. Journal of Cleaner Production, 18(12), 1142–1148.CrossRefGoogle Scholar
  61. Zhang, C., Lou, Z. K., & Zhan, D. B. (2014). Political connection, financial performance and corporate social responsibility—evidence from Chinese listed companies in chemical industry. Management Review, 26(1), 130–139.Google Scholar
  62. Zhang, X. G., & Zhong, M. C. (2011). Game analysis and countermeasures of government environmental regulation and corporate pollution. Journal of Chinese Population, Resource and Environment, 2, 31–35.Google Scholar
  63. Zhao, F., & Ma, G. M. (2011). Literature review and prospects on political connection. Economic Review, 3, 151–160.Google Scholar
  64. Zhou, Q. X. (2009). Government intervention, common agency and corporate pollution abatement incentives—empirical test on panel data sulfur dioxide emissions from province. Nankai Economic Studies, 4, 109–129.Google Scholar

Copyright information

© Springer Science+Business Media Dordrecht 2015

Authors and Affiliations

  • Zhihua Cheng
    • 1
  • Feng Wang
    • 1
  • Christine Keung
    • 2
  • Yongxiu Bai
    • 1
  1. 1.School of Economics and ManagementNorthwest UniversityXi’anChina
  2. 2.Wellesley CollegeWellesleyUSA

Personalised recommendations