Environmental information disclosure and the investment-cash flow sensitivity

Purpose- In 2008 China issued the Measures for Disclosure of Environmental Information. Using introduction this environmental policy, paper examines how information disclosure quality affects a firm's access to capital markets. particular, relationship is investigated between and investment-cash flow sensitivity, measure financial constraints, before after implementation policy. Methodology- The content analysis used construct quality. First all, contents both qualitative quantitative disclosures are analyzed with respect following ten areas reported in firms' annual reports: (1) corporate investment protection, (2) government support related control, (3) tax reductions programs, (4) lawsuits, settlements, penalties, rewards (5) emissions pollution reduction implementation, (6) certifications (7) firm protection missions goals, (8) plans strategies, (9) bank loans (10) other environmental-related information. And then, different points assigned based on each aggregated obtain an overall score. Univariate regression tests examine sensitivity. Findings- A negative association found sensitivity policy was implemented, while no such implementation. Furthermore, observed tends be stronger firms high-polluting industries. Conclusion- Given policies emerging markets often viewed great doubts, our findings suggest that plays important role Keywords: disclosure, asymmetric information, constraints JEL Codes: G18, G30, G32