Investor attention and environmental information disclosure quality: Evidence from heavy pollution industries in China

Abstract

Using listed firms from 16 heavy pollution industries in China, we show that investor attention can significantly improve the quality of corporate environmental information disclosure. By examining the heterogeneity effects of investor attention under different firm characteristics, locations, and external supervision, we reveal that this improvement effect is more pronounced for smaller firms, state-owned enterprises, firms with weaker corporate governance, and firms located in China's western regions (regions with poor economic development). We further find that public's attention to environmental issues promotes the investor attention level on firms in heavy pollution industries, thus improving firms' environmental information disclosure quality. Overall, our results emphasize the role of external investor attention on corporate environmental issues.