This study aims to examine the effects of local tournament incentives on environmental, social and governance (ESG) disclosure and the quality of such disclosures among Chinese…
Abstract
Purpose
This study aims to examine the effects of local tournament incentives on environmental, social and governance (ESG) disclosure and the quality of such disclosures among Chinese A-share listed companies. Furthermore, it seeks to investigate the moderating roles of CEO duality, institutional investors’ shareholding and product market competition in this relationship.
Design/methodology/approach
This study uses a quantitative approach, and data from A-share listed companies in China spanning from 2012 to 2021. To test the proposed hypotheses, the authors conduct hierarchical regression analysis along with a series of robustness tests to ensure the validity of our findings.
Findings
The findings of this study indicate that local tournament incentives have a positive impact on companies’ propensity to disclose ESG information, yet they negatively influence the quality of these disclosures. Additionally, the presence of CEO duality and product market competition attenuate this relationship, whereas the shareholding of institutional investors serves to strengthen it.
Practical implications
This study’s findings can aid policymakers and regulators in China and other emerging economies in policies that promote high-quality ESG information disclosure, taking into account local tournament incentives. Furthermore, the study underscores the importance of maintaining robust corporate governance structures within firms to ensure that CEOs’ self-serving motivations do not undermine ESG disclosure.
Originality/value
This study adds to the ongoing discourse on the significance of ESG disclosure in emerging economies by analyzing the influence of executive promotion incentives on ESG disclosure from an external labor market standpoint. By exploring the potential self-serving motivations of CEOs in promoting ESG values and practices within organizations, this paper addresses a gap in the existing literature.
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Ruopiao Zhang, Carlos Noronha and Jieqi Guan
There is currently a host of measurements of corporate social performance (MCSPs) each with its own individual merits and concerns. This paper aims to bring new insights into…
Abstract
Purpose
There is currently a host of measurements of corporate social performance (MCSPs) each with its own individual merits and concerns. This paper aims to bring new insights into measuring corporate social performance (CSP) by advocating the use of a complementary indicator known as the social contribution value per share (SCVPS) developed by the Shanghai Stock Exchange in China.
Design/methodology/approach
A three-dimensional model is built to dissect the theoretical foundation of SCVPS. Next, this paper undertakes an extensive literature review of the criteria and methodologies which SCVPS relies upon to assess a firm’s social performance. Then SCVPS is critically compared with other commonly used MCSPs from different angles.
Findings
This paper highlights the major limitations of some MCSPs, namely, the lack of transparency, selection biases and the exclusion of controversial industries. It is suggested that SCVPS is worthy to be considered as a complementary indicator for CSP given its innovativeness, standardization and practicability.
Practical implications
The authors argue that there is great theoretical and practical significance for firms to set per-share social contribution indicators using SCVPS on a global basis, which helps to enrich decision-making processes when combined with other MCSPs.
Originality/value
This paper suggests SCVPS as a complementary indicator of social performance and anatomizes this choice indicator with other MCSPs in terms of their theoretical underpinnings, practical applications and probable deficiencies.
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Ruopiao Zhang, Teresa Chu, Carlos Noronha and Jieqi Guan
This study introduces Social Contribution Value per Share (SCVPS), an indicator devised by the Shanghai Stock Exchange (SSE), as an easy-to-interpret Measurement of Corporate…
Abstract
Purpose
This study introduces Social Contribution Value per Share (SCVPS), an indicator devised by the Shanghai Stock Exchange (SSE), as an easy-to-interpret Measurement of Corporate Social Performance (MCSP) to the international research arena. The authors first explore the informativeness role of voluntary disclosure of SCVPS in the stock market. The authors then go one step further to demonstrate the relationship between corporate value creation quantified by SCVPS and firm value.
Design/methodology/approach
The study takes a new perspective – a quasi-natural experiment of SCVPS disclosure in 2008 and uses a Propensity Score Matched Difference in Difference model (PSM-DiD) to investigate the impact of SCVPS disclosure policy on stock price synchronization and firm value. Through manually recalculating all the values of SCVPS and its components, this study enables us to further investigate the relationship between corporate value creation for various stakeholders and firm value.
Findings
This study reveals that voluntary disclosure of SCVPS can signal firm-specific information to the market and reduce noise in returns, thus affecting stock price synchronization. The findings further demonstrate that such firm-specific information has value relevance to firm performance. Moreover, the authors demonstrate that corporate value creation for different stakeholders measured by SCVPS can significantly affect firm value. The moderating effects of ownership structures and industry types are also investigated, and an endogeneity test confirms the robustness of the findings.
Practical implications
This study argues that SCVPS offers an economically viable way for firms, including small-and-medium-sized enterprises, in emerging economies to disclose corporate value creation and provide the public with a direct understanding and appreciation of the values created by corporations for stakeholders.
Originality/value
The result makes contributions to the MCSP literature and explores the informativeness of SCVPS disclosure. Besides, this paper demonstrates that SCVPS offers a good setting to explore the effect of corporate value creation on firm performance in an emerging market.
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Ruopiao Zhang and Carlos Noronha
Drawing upon resource-based view (RBV) and attribution theoretical lenses, this chapter provides a paradigm for examining the interplay among environmental investment towards…
Abstract
Drawing upon resource-based view (RBV) and attribution theoretical lenses, this chapter provides a paradigm for examining the interplay among environmental investment towards green innovation, environmental disclosure as well as firm performance using the structural equation modelling (SEM) methodology. This chapter demonstrate a growing environmental awareness among stakeholders of the relevance of environmental performance to share value. It is also suggested that the mediating power of environmental disclosure between environmental investment and firm value as well as incremental goodwill is crucial. The findings of this chapter provide critical implications for several stakeholders that if environmental performance is hypothesised to affect the firm's value, companies may take proactive measures to avert potential environmental-related violations. Besides, investors may trade based on the evidence as to how firm value and its goodwill from acquisition will be affected by news of its environmental performance.
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Ningyu Zhai and Scarlett Ruopiao Zhang
In developing countries, rapid industrial growth frequently results in companies with high pollution levels, which in turn exhibit characteristics such as elevated emissions…
Abstract
In developing countries, rapid industrial growth frequently results in companies with high pollution levels, which in turn exhibit characteristics such as elevated emissions, increased energy consumption and overcapacity. In order to promote sustainable development among these heavily polluting firms, it is essential to implement a system of incentives and penalties that encourages environmentally responsible behaviour. China's environmental protection tax has replaced the previous pollution discharge fee (PDF) system. This tax aims to guide enterprises towards continuous adjustments and improvements in their production methods, increased investments in green technology, adoption of environmentally friendly production methods, reduced pollutant emissions and promotion of high-quality development. This chapter analyses how China's Environmental Protection Tax Law, enforced in 2018, affects the sustainable development capabilities of A-share listed companies in China. We utilise a difference-in-differences (DiD) model and measure total factor productivity (TFP) to quantify the impact of the tax law on these enterprises. TFP is a key indicator used to measure the effectiveness of resources utilised by enterprises in the production process. Our empirical analysis provides compelling evidence that the implementation of environmental protection taxes has significantly enhanced the TFP of heavily polluting enterprises. Importantly, the impact of these taxes is more pronounced for state-owned enterprises (SOEs) in comparison to their private counterparts in this sector. These findings offer valuable insights for policymakers in developing countries as they consider the design of environmental protection tax systems and supportive measures to promote sustainable development of companies with significant environmental impacts.