Environmental information disclosure and green transformation: Evidence from Chinese manufacturing enterprises

Green transformation (GT) is pivotal for global sustainability, with environmental information disclosure (EDI) playing a significant role, especially in the Chinese corporate landscape. This study, spanning 2009 to 2020 and leveraging a comprehensive dataset of listed companies, explores the intricate relationship between EDI and GT in Chinese manufacturing enterprises by constructing a fixed-effect model. Motivated by the imperative to address crucial issues in GT in China, this research utilizes empirical data to uncover the mechanisms through which EDI fosters GT. The study reveals how EDI reinforces environmental consciousness within manufacturing firms. Findings underscore the crucial role of EDI in enhancing GT in manufacturing enterprises, operating through two primary mechanisms. Firstly, EDI alleviates financing constraints towards GT within these firms. Secondly, it facilitates the adoption of enhanced internal governance practices, catalyzing the development of high-quality capital renewal projects. A battery of mechanism tests provides robust evidence that EDI enhances environmental awareness, mitigates financing constraints, and amplifies the motivation and capability of manufacturing enterprises for GT. This multifaceted approach ultimately fosters high-quality GT within companies. Further research reveals that the incentive effect of EDI on GT is more significant among private enterprises and heavily polluting industries. The study reveals the subtle interplay between EDI and GT, highlighting its relevance to policymaking and practical considerations. It provides valuable insights into the ongoing pursuit of sustainability and the integration of green practices into the corporate world.