Corporate environmental disclosure and local government environmental oversight in China
ISSN: 0114-0582
Article publication date: 16 February 2022
Issue publication date: 1 March 2022
Abstract
Purpose
Recent research has drawn attention to the tension between the Central and local governments in China regarding their roles in environmental protection. This paper aims to explore this tension and examine the extent to which local/provincial government’s environmental oversight has influenced the quality of corporate environmental disclosure in China.
Design/methodology/approach
A sample of 198 listed companies in heavily polluting industries were selected to examine the relationship between their environmental disclosure quality and the respective local government’s environmental oversight level.
Findings
The results provide evidence that local/provincial government’s environmental oversight significantly influences environmental disclosure in China. Despite the coercive pressure from the powerful Central government on corporate environmental disclosure, local/provincial governments are able to buffer the pressure and adjust the intensity of their environmental oversight on companies during the implementation of central policies to retain local economic and political interests. This may partially explain the persistent issue of low environmental disclosure quality in China.
Research limitations/implications
This study enriches our understanding of the significant role of local governments in China in enhancing or sometimes discounting the regulatory enforcement of the Central government on corporate environmental disclosure, pointing to the need for concerted efforts by both local and Central governments to advance environmental disclosure development.
Originality/value
Research on environmental disclosure in developed countries has been well established in the literature. However, such research in developing nations is still limited, especially in China, the world largest developing country. The existing literature on environmental disclosure in China links it with either market demands, or regulatory enforcement from the Central government. The importance of local/provincial governments and their environmental oversight has long been ignored, which motivates this research.
Keywords
Acknowledgements
The authors would like to thank for the comments and suggestions received at the 2020 conference of Accounting and Finance Association of Australia and New Zealand, the 2019 Australasian Centre for Social and Environmental Accounting Research conference, and the research seminar at the University of South Australia Business in 2019. They are also grateful for the encouragement and constructive feedbacks from the editor Professor Chris van Staden and two anonymous reviewers.
Citation
Qian, W., Zhu, P. and Tilt, C. (2022), "Corporate environmental disclosure and local government environmental oversight in China", Pacific Accounting Review, Vol. 34 No. 2, pp. 358-382. https://doi.org/10.1108/PAR-05-2020-0061
Publisher
:Emerald Publishing Limited
Copyright © 2022, Emerald Publishing Limited