Environmental disclosure as a proactive tool to intra-industry market reaction in China

ABSTRACT

This article examines the intra-industry market reaction to successive environmental accidents associated with Sinopec and PetroChina in China. Evidence indicates that a significantly negative intra-industry reaction occurred after these accidents. Furthermore, intra-industry firms with ex-ante environmental disclosures experienced a less negative reaction after successive accidents. Specifically, the mitigating effect of ex-ante environmental disclosures has certain extent of time delay, which differs from the immediate impact of ex-ante environmental disclosure within the context of developed countries.

KEYWORDS:

• Environmental disclosure
• market reaction
• environmental accidents
• intra-industry

JEL CLASSIFICATION:

• G14
• D21

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Funding

This work was supported by the Social Science Funds of Hunan Province under Grant No. 14 BR13; National Natural Science Foundation of China under Grant No. 71271079; National Natural Science Foundation of China under Grant No.71672055.