Information Transparency and the Heterogeneous Effects of Environmental Policy on Firm Value: International Evidence

Using firm level data from 28 countries, we examine how disclosure requirements shape the relationship between national environmental policy stringency, measured by the OECD Environmental Policy Stringency Index ( EPSI ), and firm value. We find that higher EPSI is associated with lower firm valuations in countries with low disclosure quality. In contrast, this relationship turns positive in countries with high‐quality disclosure regimes. Furthermore, EPSI is more positively associated with firms' green patent applications in countries with higher disclosure quality. These results suggest that transparent information environments mitigate information asymmetries and enhance the effectiveness of environmental policies in creating firm value.