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Corporate political activity and environmental sustainability disclosure: The case of Chinese companies

Lopin Kuo (Department of Accounting, Tamkang University, New Taipei City, Taiwan)
Hui-Cheng Yu (School of Accounting, Hunan University of Commerce, Changsha, China)

Baltic Journal of Management

ISSN: 1746-5265

Article publication date: 3 July 2017

Abstract

Purpose

Taking on a corporate political activity (CPA) perspective, the purpose of this paper is to investigate how CPA affects environmental sustainability disclosure among firms in China and whether the disclosure level varies across ownership structures and environmental sensitivity statuses.

Design/methodology/approach

The sample comprises 652 corporate social responsibility reports released by firms in China during 2008-2010. Data are coded through a content analysis procedure before being analyzed using regression analysis.

Findings

The authors find a significant and positive association between CPA and environmental sustainability disclosure. However, the effect of CPA on environmental sustainability disclosure is significantly negative among firms in the environmentally sensitive industries (ESIs) and privately owned enterprises (POEs). More specifically, a firm’s environmental disclosure level is lower when the proportion of board members with a significant status, such as party chief of the Communist Party, is higher among firms in ESIs and POEs. This implies that firms with guanxi (i.e. Chinese-specific CPA) are more likely to be free from trouble.

Originality/value

This empirical study offers important evidence on the fulfillment of environmental sustainability policies and the effectiveness of regulatory controls that China has used in the development toward a low-carbon economy.

Keywords

Citation

Kuo, L. and Yu, H.-C. (2017), "Corporate political activity and environmental sustainability disclosure: The case of Chinese companies", Baltic Journal of Management, Vol. 12 No. 3, pp. 348-367. https://doi.org/10.1108/BJM-07-2016-0149

Publisher

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Emerald Publishing Limited

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